PROMISE KEPT: President Trump signs landmark phase 1 deal with China

In a historic moment, President Donald J. Trump was joined today by the Vice Premier of China in the East Room of the White House. Together, they signed a new, fully enforceable trade agreement that rebalances this vital trade partnership while boosting American businesses, farmers, manufacturers, and innovators.

“From day one, my Administration has fought tirelessly to achieve a level playing field for the American worker,” President Trump said. Before he took office, Washington had long tolerated unfair trade practices that buoyed special interests while hurting U.S. working- and middle-class families.

President Trump: I’m putting the American people first!

“For years, politicians ran for office promising action to remedy these practices, only to do nothing but allow them to continue,” the President said this morning. “Unlike those who came before me, I kept my promise . . . Now, our efforts have yielded a transformative deal that will bring tremendous benefits to both countries.”

The new agreement makes good on a number of key promises to fix trade with China:

  • American-made products: To help rebalance the relationship, China has pledged to increase imports of American goods and services by at least $200 billion.
  • Agriculture purchases: As part of that commitment, China will be stocking up on goods from U.S. farmers—between $40 and $50 billion worth.
  • No more forced technology transfers: For the first time ever, China agreed to end its practice of forcing American companies to transfer their technology to Chinese companies as a condition for doing business there.
  • Fair currency practices: Beijing has agreed to stronger commitments on its practices regarding currency devaluations and exchange rates.

And that’s just phase one. The work on a phase-two deal is already underway.

“With this signing, we mark more than just an agreement. We mark a sea change in international trade. At long last, Americans have a government that puts them first at the negotiating table,” President Trump said.

A stronger America, of course, doesn’t come at the rest of the globe’s expense. On the contrary, when the United States is thriving, it makes the world a safer, more stable place. A better and fairer trade partnership with China will do much of the same.

Starting today, a new era of harmony, prosperity, and commerce officially begins.

Iowa Gov. Kim Reynolds explains what this deal means for rural America

President Trump: China will be buying A LOT of these American goods

PODCAST: What You Need to Know About New US-China Trade Deal

Will the new deal boost the American economy? Is it normal for a trade deal to demand one party spend a certain amount? Will it curb China’s theft of intellectual property from U.S. companies? Riley Walters, a policy analyst at The Heritage Foundation who focuses on Asia’s economy and technology, has answers. Read a lightly edited transcript of the interview, posted below, or listen on the podcast:

We also cover the following stories:

  • House Speaker Nancy Pelosi announces the seven impeachment managers.
  • Rep. Jerry Nadler, one of the impeachment managers, dismisses calling Hunter Biden as a witness.
  • As Russian President Vladimir Putin makes moves to secure his control after 2024, the prime minister and entire Cabinet resign.

The Daily Signal podcast is available on Ricochet, Apple PodcastsPippaGoogle Play, or Stitcher. All of our podcasts can be found at If you like what you hear, please leave a review. You can also leave us a message at 202-608-6205 or write us at Enjoy the show!

Kate Trinko: On Wednesday, President Donald Trump signed a new trade deal with China. … Joining me to discuss this deal today is Riley Walters, a policy analyst at The Heritage Foundation who focuses on Asia’s economy and technology. Riley, thanks for joining us.

In these trying times, we must turn to the greatest document in the history of the world to promise freedom and opportunity to its citizens for guidance. Find out more now >>

Riley Walters: Thank you for having me.

Trinko: Before we get into the new trade deal, I actually want to roll back the clock a little bit. We’ve seen a lot of tension between President [Donald] Trump and China over trade during his presidency. How intense have the negotiations and the fights been? And does that color how we should look at this new deal?

Walters: I think if you look at the last couple of years of negotiations between Washington and Beijing, you see a lot of back and forth. There was certainly some times when it seemed like negotiations were going well, both sides seemed to have been making progress. But there were clearly some times where things fell out of line. During those turbulent times you’d see exculpatory efforts on both sides by imposing new tariffs and such like that.

Last year, I think it was last year around May, we saw probably the biggest dispute between the two sides and it almost seemed like negotiations fell apart completely, almost as if they weren’t going to go anywhere from there.

So I think what we see today is a complete 180. I mean, we have a deal now, right? And so this, I think, marks the point where we sort of returned to some sort of level of normalcy between the United States and China on economic and trade issues. And so I think it’s good.

Obviously, this is just phase one of a two-phase deal and so over the next year we should hopefully see a lot more progress.

Trinko: OK. So, our listeners won’t know this, but when Riley came to the studio, he had a huge sheath of papers with all the details, so obviously this trade deal is very complicated. But could you break down for us, what are some of the highlights and key things that people should know about the trade deal?

Walters: So, it’s almost a 100-page document. It gets into some very technical trade and legalese issues. It touches on a variety of issues.

I mean, there are roughly eight chapters in this text … touching on everything from the protection of intellectual property and trade secrets [to] reducing technology transfers from American companies to Chinese entities. It touches on exchange rates and increase in trade efforts. It touches on a whole variety of things.

Throughout the document there are new metrics, dates by which certain government officials need to have certain reports. There are certain trade measures. For example, China needs to purchase over the next two years an additional $200 billion worth of a variety of American goods.

And, of course, there are communications that are set up, dialogues that are making sure that this agreement goes into force, that every part of the agreement is disputable to some extent, and, of course, this has been agreed to on both sides.

So what is in this document right now is the new policy. I would actually say this is probably the most comprehensive trade agreement we’ve had with China since their joining of the WTO [World Trade Organization] 20 years ago. So this is pretty significant.

Trinko: You mentioned that the deal requires China to buy $200 billion worth of additional goods over the next couple of years. I am not an expert on trade deals. Is it normal for a deal to include this kind of mandatory buy with it? And what do you think about this provision?

Walters: This is not normal. This is certainly something new generally. So I think this is actually probably one of the few things that’s covered regularly in the news, is this $200 billion in additional purchases by China over the next two years.

What they’re supposed to do is buy $200 billion in addition to what they bought in 2017, which was roughly $190 billion worth of goods and services from the United States.

So, for the rest of this year and all of next year, they need to buy roughly $390 billion worth of goods and services, and those break down by industries, manufactured goods, agricultural energy, etc.

But again, this is not normal. This is not something you usually find in trade agreements because trade agreements are usually about removing barriers. It’s about removing the tariffs or taxes on imports that countries maintain. It’s about removing regulatory barriers.

… For example, biochemical restrictions or chemical or scientific restrictions on agricultural products, removing those so that the goods that we trade are free from restriction.

This is different. This sets up a sort of a mandatory “you must buy,” and there are going to be a lot of questions about how China does this.

Who in China is actually going to start buying these goods, right? Is it through state-owned enterprises? Is it “private Chinese companies” at the behest of the Chinese government? And, of course, the question of whether the United States can actually provide these goods.

There’s going to be a lot of, I think. questions about just the way that this is actually implemented.

Trinko: OK. So the deal reduced some tariffs. It also eliminated some other potential tariffs that could have been coming down the pipeline. Overall, did you think what the deal did for tariffs made sense or didn’t, and if so, why?

Walters: As a part of this deal, there will be some tariffs that remain in place by this administration. They are going to keep a 25% additional tariff or import tax on roughly $250 billion worth of goods and a 7.5% tariff tax on roughly $120 billion worth of imports from China. So all those will roughly remain.

The president said he’s more than willing to get rid of those as part of a phase-two deal. We don’t know when the phase-two deal could happen. Some suggest 10 months, it could be longer, especially things could change if the election outcome changes. And so those will remain in place for at least the next year or so.

There’s been no reports about how China will be decreasing its import taxes. Obviously, they too have been implementing their own tariffs over the last couple of years in retaliation to the United States. But that’s going to be, I think, what to expect for at least the next year.

Trinko: Did this deal address intellectual property concerns at all? Obviously, there’s been a lot of concern that China is taking intellectual property from U.S. companies. Does this address that?

Walters: It does. The first two chapters are 21 pages long. They address intellectual property protection or trade secret protections and technology transfer.

Not to get too much into detail, but basically it says China will protect American intellectual property, our trade secrets, the things that actually make companies profitable and want to invest in and do business. And they won’t require American companies or entities to transfer their sensitive technology to Chinese entities for any reason.

Sometimes in China you hear stories of American companies who want to get into China, they are by law sometimes required to enter into a joint venture with a Chinese company. And then the Chinese company says, “Well, if you want to make the deal, we need to have access to your intellectual property.”

So that’s supposed to no longer happen. We will see, of course, over the next a year or so whether that’s true or not.

And there are some other interesting changes in how American companies can sort of fight their legal case in China when they feel that their intellectual property has been stolen. So some real interesting stuff there. Again, we’ll have to see whether it actually produces anything of substance. But I think on paper at least it’s a positive step.

Trinko: I know you don’t have a crystal ball to see America’s economic future, but how would you guess this deal would or wouldn’t affect the U.S. economy?

Walters: One of the couple of things that are a drag on the U.S. economy right now, not, of course, pushing us into recession, I mean, there’s a lot of positive economic activities that the Trump administration has helped with over the last couple of years, but a couple of the drags are the fact that tariffs will be remaining on over $300 billion worth of goods.

The silver lining is that U.S. trade with China only makes up roughly 3% of our GDP [gross domestic product] so it’s not that significant. I mean, it is hundreds of billions of dollars worth of goods. The Trump administration has collected roughly $43 billion in new taxes from Americans who import from China. So that is a cost.

But I think one of the biggest gains from this, and it’s going to be harder to actually quantify, is the uncertainty it removes. I think the trade deal today brings back a lot of certainty. I think anyone who thought the Trump administration’s goal is to decouple from China, with this deal, I think that idea is dead.

This deal is building a new U.S.-China economic relationship, I think for good cause, too. And so this will bring a lot of certainty back to our economic relationship.

Trinko: And how do you think it might affect China’s economy?

Walters: Again, same way. I think perhaps marginally, a positive marginal.

They themselves have a lot of domestic issues that they need to take care of. Looking forward toward the way that debt is accumulated in China, the way that their demographics are shaping up, the fact that, as a part of phase two, we’re going to have to negotiate a lot of sensitive issues like state-owned enterprises and the support that they get from the government and how those not just affect the U.S. economy, but how they negatively affect the Chinese economy as well.

Trinko: OK. Riley Walters, thanks so much for joining us.

Walters: Thank you.


Katrina Trinko

Katrina Trinko is editor-in-chief of The Daily Signal and co-host of The Daily Signal PodcastSend an email to Katrina. Twitter: @KatrinaTrinko.

RELATED ARTICLE: Meet House Democrats’ 7 Impeachment Managers

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The Heritage Foundation has compiled input from more than 100 constitutional scholars and legal experts into the country’s most thorough and compelling review of the freedoms promised to us within the United States Constitution into a free digital guide called Heritage’s Guide to the Constitution.

They’re making this guide available to all readers of The Daily Signal for free today!


EDITORS NOTE: This Daily Signal column is republished with permission. © All rights reserved.

The Growth of Government in America

American government has far outgrown the limits set by our founders in the Constitution.

This article is adapted from a study prepared by the Institute for Policy Innovation.

Let us begin with a simple but vitally important proposition: Government in America was never supposed to engage in the multitude of activities that it does today.

When the United States gained its independence more than 200 years ago, the founding fathers envisioned a national government with explicit and restricted responsibilities. These responsibilities pertained mainly to protecting the security of the nation and ensuring “domestic tranquility,” which meant preserving public safety. Especially in the realm of domestic affairs the founders foresaw very limited government interference in the daily lives of its citizens. The founders did not create a Department of Commerce, a Department of Education, or a Department of Housing and Urban Development. This was not an oversight: They simply never imagined that the national government would take an active role in such activities.

The minimal government involvement in the domestic economy would be funded and delivered at the state and local levels. Even that involvement was to be restricted by Congress’ authority over interstate cornmerce, an authority granted to Congress by the founders for the purpose of preventing the state governments from interfering with commerce.

Recognizing the propensity of governments to grow, the people added the Bill of Rights to the Constitution as an additional layer of protection for the rights of individuals against the state. The Bill of Rights was to ensure that government would never grow so large that it could trample on the individual and economic liberties of American citizens. These liberties are eroding. The United States has been gradually transformed from a nation with almost no government presence in the marketplace to one in which the government is now the predominant actor in the domestic economy. Consider the following:

  • There are now more Americans employed by government than by the entire manufacturing sector in America.
  • In the past 25 years the federal government has spent $2.5 trillion on welfare and aid to cities. This is enough money to purchase all of the assets of the Fortune 500 companies plus all of the farmland in the United States.
  • In 1987 U.S. farmers received more money in government subsidies than they did in selling their crops in the marketplace. In short, farmers now produce for the government, not for U.S. consumers.
  • In three states today—California, Maine, and New York—almost half of all middle-income family wages are captured by government through income, payroll, property, and sales taxes, and other levies.

Why is the American public not rising up in protest? The answer seems to be that the growth of government has been sufficiently gradual over the past 50 to 100 years that most Americans today probably believe that this is the way government in America ought to act and has always acted.

Both of these contentions are wrong. Government has not always, and ought not, act as it does now. The following sections demonstrate with the aid of graphs and figures how government has grown over our nation’s history. We examine federal, state, and local government growth in five areas: expenditures, taxes, debt, welfare and transfer payments, and employment.

We standardize the measurement of each of these government growth indices in three ways: in real 1990 dollars, in real per capita 1990 dollars, and as a share of total output or income. Unless otherwise indicated, all figures are presented in 1990 dollars. Except in a few specified instances, all of the data are from standard government sources.

Federal Outlays

Perhaps the best measure of the impact of government activity is how much it spends each year. Figure 1 shows the expansion of the federal budget from 1800 to 1992. As the steep ascent shows, federal spending has exploded more than ten thousandfold since 1800 with almost all of the increase in the past 40 years. Real federal outlays have climbed from $0.1 billion in 1800 to $0.6 billion in 1850, to $8.3 billion in 1900, to $235.1 billion in 1950, to $1,450.0 billion in 1992.

Figure 1

Real Federal Outlays, 1800-1992

Of course, the nation is much larger today than in earlier periods, so one would expect government also to be bigger. Figure 2 shows the per capita level of federal spending over time. Even when adjusting for the growth in population size (and inflation), federal expenditures have mushroomed:

Figure 2

Real Per Capita Federal Outlays, 1800-1990

  • The federal government spent $16 per person in 1800, $27 per person in 1850, $109 per person in 1900, $1,544 per person in 1950, and $4,760 per person in 1990.

Bear in mind, this does not include the cost of back door spending, such as mandates and regulations. If they were included here, the cost of the federal government per person today would easily exceed $10,000.

One of the most meaningful ways of measuring the burden of government is how much it spends relative to total economic output. One might argue that government spends more money today because the American economy has grown so much larger than in earlier periods. If government is consuming the same proportion of total output in two periods, then the economic burden of paying for its activities is roughly the same, even if expenditures are much larger in the later period. Unfortunately, federal spending is not keeping pace with economic growth—it is far outpacing economic growth:

  • In 1900 the federal government consumed less than 5 percent of total output.
  • In 1950 the federal government consumed roughly 15 percent of total output.
  • In 1992 the federal government consumed almost 25 percent of total output.

The Composition of Federal Outlays

The single most important activity of the federal government is to provide for the national defense. A free nation spends as much as necessary to protect its borders and its citizens. Is the modern-day growth of government on the federal level a result of the national defense build-up in the Cold War era? The answer is clearly no. National defense spending as a share of the total federal budget has been continually shrinking, with the exception of brief periods of war:

  • Defense spending constituted more than half of total federal outlays in 1800.
  • Defense spending constituted more than one-third of federal outlays in 1900.
  • Defense spending now constitutes little more than one-fifth of federal outlays.

The flip-side of this steady reduction of defense expenditures as a share of the budget is an expansion in spending on civilian programs, such as agriculture, health care, housing, and aid to state governments. Until the 1930s, the federal government spent almost nothing in each of these areas. This rise has been most prominent since 1950.

Figure 3 shows the tremendous growth in federal health care spending, from $100 million in 1900 to $156 billion in 1990.

Figure 3

Real Federal Health Care Expenditures, 1900-1990

These data on federal domestic spending powerfully refute the common complaint by special interest groups that favored domestic programs have been substantially cut back in recent years. Although there were modest spending reductions on selected domestic programs in the Reagan years, in 1992 the outlays for every major domestic area of the budget were at an all-time high—with the exception of agriculture.

State and Local Spending

Some budget analysts claim that federal spending has increased to compensate for budget reductions on the state and local levels. The data show otherwise:

  •  In 1900 states spent $32 per person.
  • In 1950 states spent $470 per person.
  • In 1990 states spent $1,934 per person.

On the local level, per capita expenditures have been rising rapidly as well, though not as rapidly as federal and state expenditures. For every dollar that local governments spent per person in 1900, they spent $2.50 in 1950 and $8.50 in 1990.

Although the 1980s are commonly reported to have been a decade of government neglect, this assertion is contrary to fact. State expenditures, for example, rose at twice the inflation rate in the 1980s. Local expenditures grew nearly as fast as state expenditures. Moreover, celebrated cutbacks in federal aid to localities were almost entirely replaced by increases in state aid to local governments. In sum, the past decade was one of the most expansive for state and city budgets in U.S. history.

Total Federal, State, and Local Expenditures

In 1900 government in America was still, by today’s standards, comparatively lean and efficient. At that time, total federal, state, and local expenditures were $26 billion. Americans now support a nearly $2.5 trillion government, almost a 100-fold increase in real outlays. (See Figure 4.)

Figure 4

Real Federal, State, and Local Government Expenditures, 1900-1990

Both as a share of total output and on a per-person basis, this is a substantial amount of government to have to pay for.

  • Government consumed almost 10 percent of GNP in 1900 and now consumes more than 35 percent.
  • Government spent $1,650 for every household in 1900 and today spends $23,140. (See Figure 5.)

Figure 5

Real Total Government Expenditures per Household, 1900-1990

In sum, whatever social and economic problems confront America today, they are clearly not a result of a neglectful or under-funded public sector.

Total Taxes

The American Revolution has been called the greatest tax revolt in world history. Yet as a result of the growth of government expenditures described above, taxes are now at levels that would have been inconceivable 200, 100, or even 50 years ago. Today, when combining federal, state, and local taxes, many middle-income Americans work a larger share of the day to pay the government’s bills than their own. Even the tax revolt of the late 1970s and early 1980s proved to be merely a temporary restraint on the demands of the government tax collector. Consider the percentage of income that is seized by government in taxes:

  • In 1930 workers paid one of every eight dollars of them income in taxes.
  • In 1950 workers paid one of every four dollars of their income in taxes.
  • In 1992 workers paid one of every three dollars of their income in taxes.

The tax burden is even more clearly expressed by examining taxes paid per household as shown in Figure 6.

Figure 6

Real Total Government Taxes per Household, 1900-1990

  • In 1900 the average family paid nearly $1,400 in taxes.
  • In 1950 the average family paid nearly $7,000 in taxes.
  • In 1992 the average family paid over $16,000 in taxes.

This rising tax burden has meant that workers have less take-home pay for consumption and savings. It also means that workers’ incentive to work and employers’ incentive to hire are impeded by excessive taxes. These figures do not even include the cost to American individuals and firms of complying with complicated and time-consuming tax laws. By one estimate, Americans spend 5.4 billion hours at an annual cost of $600 billion to the economy just completing the paperwork requirements of federal taxes.

The Federal Tax Burden

Reliable federal tax data are available back to 1800. For the first 100 years of the nation, taxes were very low. In colonial times opposition to high taxes was deeply ingrained in the American spirit, and this hostility lasted throughout the nineteenth century. Government revenues predominantly came from two sources: revenue tariffs and land sales. The limited sources of revenues for the federal government were a natural restraint on its expenditures. Three events changed that. The first was the imposition of the income tax in 1913. The second was the two World Wars, which made the American people accustomed to very high tax rates. And the third was the creation of the Social Security program with gradually rising payroll taxes.

Taxes were relatively stable until 1900. It was not until World War II that the federal tax burden rose about threefold.

  • In 1800 per capita federal taxes were $20.
  • In 1900 per capita federal taxes were $110.
  • In 1950 per capita federal taxes were $1,460.
  • In 1990 per capita federal taxes were $4,000.

Income Taxes

The most dreaded tax for the vast majority of Americans is the income tax. Until the ratification of the Sixteenth Amendment, there was no federal income tax—the Supreme Court had consistently ruled the income tax unconstitutional. No law has contributed to the growth of government and the surrender of personal liberties and privacy rights more fully than the creation of the federal income tax. Today, more so than any other federal agency, the Internal Revenue Service has broad and sweeping powers to investigate the personal activities and finances of Americans. Without a search warrant, the IRS has rights to search the property and financial documents of American citizens. Without a trial, the IRS has the right to seize property from Americans.

The income tax burden on the federal level has been continually climbing. During periods of war, income taxes have been substantially raised, and they never are reduced to their pre-war levels. Today, the average American household pays almost $6,000 in federal income taxes, double the 1950 burden.

States have also become much more reliant upon income taxes as a source of revenues in the past 50 years. Prior to World War II only a handful of states even imposed any income tax. Today, only nine states do not have an income tax, and four of those are considering introducing one. Today state and city governments raise about $110 billion per year through income taxes. Statistics show the rising share of income taxes as a share of total state and local taxes:

  • In 1900 state and local governments raised none of their revenues through income taxes.
  • In 1960 state and local governments raised 10 percent of their revenues through income taxes.
  • In 1992 state and local governments raised 26 percent of their revenues through income taxes.

The increased reliance of government at all levels on the income tax is a disturbing trend. Almost all studies show that income taxes have the most damaging effect on economic growth, entrepreneurship, and employment, because they are a direct tax on work and business success. They have a punitive effect on the most vital activities in a growing economy.

Tax Rates and Payroll Taxes

As with tax revenues, tax rates have climbed during the twentieth century. When the first individual income tax was passed in 1913 the rates ranged from 1 to 7 percent. At the time, opponents charged that it would not be long before the rates were raised to the unthinkable level of 10 percent! Supporters countered that this would never happen. History has proven them wrong:

  • By 1916 the top rate was more than doubled to 15 percent.
  • By 1917, the start of World War I, the top rate was raised to 67 percent.
  • In 1944, during World War II, the top rate was raised to 94 percent.
  • In the 1950s the top tax rate remained at 91 percent.
  • During the Reagan years the top marginal rate was chopped to 28 percent.
  • Today the top marginal rate is 32 percent with proposals in Congress to raise the rate to 40 percent or more.

Although the Kennedy and Reagan administrations cut the tax rates, at lower rates the government is collecting more revenue than ever before. For instance, from 1980 to 1992 federal income tax collections rose by roughly $150 billion. Moreover, the share of the income tax burden borne by the richest 10 percent of Americans rose from 48 to 56 percent from 1981 to 1989. Virtually every country in the world today recognizes the economic benefits of lower marginal tax rates in stimulating work and in attracting investment. Every industrialized nation in the world has lower marginal income tax rates today than in 1980.

Although income tax rates have been shaved in the past decade, for middle income American families with children the income tax burden is higher than ever before. One reason is that the value of the dependent child exemption has steadily eroded over the inflationary post-World War II period. Figure 7 shows:

• In 1950 the exemption was $600 per child. In 1990 dollars, for a family with four children it would have been worth $13,260.

• In 1989 the value of the personal exemption was $2,000 per child, or $8,000 for a family with four children.

• The failure of the dependent exemption to keep pace with inflation means that the average family with four children pays taxes on $5,000 more income than it otherwise would.

Figure 7

Value of Federal Income Tax Dependent Exemption

Family with Four Children, 1950-1989

Another reason that the middle class is feeling the crushing burden of taxes in recent years is that Social Security payroll taxes have continually risen since their inception in 1937. Figure 8 shows:

  • The first Social Security payroll tax rate, which was in place from 1937 to 1950, was 2 percent.
  • By 1970, after the introduction of Medicare and the hospital insurance tax, the payroll tax rate was 9.6 percent.
  • By 1980 the rate was 12.3 percent.
  • By 1990 the rate was 15.3 percent.

Figure 8

Social Security Tax Rate, 1940-90

Today, the average middle-income family pays a greater share of its income in payroll taxes (when including the employer’s share of that tax) than in income taxes. That is why reducing payroll taxes may be the most effective means of reducing the tax burden on middle-income and low-income working families.

Borrow and Spend

In the past several decades the government’s modus operandi, tax and spend, has been expanded to include a new government financing scheme: Borrow and spend. For the first 150 or so years of this nation, government borrowing was confined to times of war. There was a moral, though not a Constitutional, imperative that government not pass on the costs of its spending to future generations. This moral restraint lasted until the 1930s.

During the Great Depression the most prominent economist of the first half of the twentieth century, John Maynard Keynes, introduced his economic theory, which in effect legitimized deficit finance as an appropriate tool of government. The Keynesian theory was that government should borrow when times are tough and then pay back the debt during times of economic expansion. President Franklin Roosevelt was the first president to embrace this theory, which fit well with his New Deal domestic spending plans. By stripping away the prevailing moral restraint against government borrowing, Keynes opened the floodgate for massive deficit spending. By 1970, Richard Nixon declared, “We are all Keynesians now,” a prophetic statement. Government red ink would soon flood to once unthinkable heights as each subsequent Congress used more and more debt as a way of avoiding having to say no to the army of Washington special interests with insatiable demands for taxpayer money.

  • The federal government has only balanced the budget once in the past 25 years.
  • In 1992 the federal deficit reached an all-time high of $290 billion, a peacetime record and 6.5 percent of GDP. The 1993 deficit is expected to break that record.
  • The federal government now borrows $700,000 million every minute of every day, 365 days a year—more than $11,000 every second.

One consequence of this borrowing binge has been a mushrooming of the national debt. Figure 9 shows:

  • In 1900 each family of four carried a $2,600 share of the national debt.
  • In 1950, each family of four carried a $41,000 share of the national debt.
  • Today each family of four carries a $62,000 share of the national debt.

Figure 9

Real Federal Debt per Family of Four, 1900-1992

Interest on the Debt

Another consequence of this borrowing binge to finance a massive expansion of government programs has been that Americans are paying more and more taxes just to pay interest on the debt. Figure 10 shows that interest is one of the fastest growing areas of the federal budget:

  • In 1900 interest expenditures were $1 billion.
  • In 1960 interest expenditures were $31 billion.
  • In 1992 interest expenditures reached $200 billion.

Figure 10

Real Federal Interest Expenditures, 1870-1992

The American public understands full well that no institution can continue to spend beyond its means year after year without risking financial ruin. Perhaps the only way to end this fiscally reckless pattern of deficit spending is to amend the Constitution with a balanced budget/tax limitation requirement. Such a measure commands the support of three-fourths of the public—and has so for almost two decades. Yet, for obvious reasons, Congress has been reluctant to slay its cash cow. Even when the deficit set new records in 1992, the House of Representatives defeated the balanced budget amendment.

A Nation “Entitled”

A great challenge in modern-day America is to find some member of the public who does not receive a check from the government for one purpose or another. Every week the federal government sends out billions of dollars to farmers for growing (and in some cases, not growing) crops; to veterans for health care or retirement; to the unemployed for not working; to those with low incomes to pay for food and shelter; to college students to pay for school; to the elderly for being retired; to the elderly and poor to pay for health care; to unwed mothers to pay for the care of their children; and on and on. Fifty or 100 years ago most of these transfer programs did not exist. Today even the slightest whisper of budget cutbacks in these programs is met with howls of protest. In short, we have become a nation of citizens who regard themselves as entitled to the largesse of government.

What is the impact of such spending on economic growth? None of these programs is oriented toward the legitimate function of government in ensuring the public safety, nor are they even building bridges or roads or cleaning the environment. These programs are not designed to create wealth in our society; they are designed solely to redistribute it. Thereby, they interfere with and destroy the wealth creation process.

The alarming trend in federal, state, and local social welfare spending can be tracked from 1900, because prior to that time there were virtually no federal transfers, except for veterans’ benefits, and the only signifi cant state and local transfers were small public aid programs.

  • In 1900 the government spent $10 billion on social welfare.
  • In 1950 the government spent $130 billion on social welfare.
  • In 1988 the government spent $980 billion on social welfare.

It is noteworthy that in 1950 these transfer programs constituted roughly 12 percent of the federal budget. Today they consume almost 40 percent. In the 1989 to 1992 period alone, real federal expenditures on entitle ments grew by $140 billion.


A huge portion of our social welfare spending today is for Social Security. Social Security is the largest and most popular program in the federal budget. Some have suggested that it is only Social Security that is growing rapidly, not other income transfer programs, such as welfare. This is not so. The anti-poverty programs are growing too. Total Aid to Families with Dependent Children (AFDC) spending at all levels of government has increased dramatically over the past 50 years:

  • In 1940 public assistance spending was $1.3 billion.
  • In 1970 public assistance spending was $16.6 billion.
  • In 1992 public assistance spending was $18 billion.

The primary reason that total welfare spending is growing is not that the benefit levels are substantially more generous, but rather that welfare caseloads continue to explode. The number of AFDC recipients continues to grow:

  • In 1936 in the middle of the Depression there were just over one-half million recipients.
  • In 1950 there were 2.2 million recipients.
  • In 1970 there were 9.7 million recipients.
  • In 1992 there were 13 million recipients.

Other public welfare programs show the same pattern of increase. For example, the food stamp program, started with a budget of less than $2 billion in 1970, now has a budget of $23 billion. Today there are roughly 25 million people collecting food stamps—or nearly one of every ten Americans. Millions of able-bodied Americans are now collecting government checks, making welfare one of the fastest growth industries in America today.

Despite the huge outlays on anti-poverty programs, this spending has done amazingly little to reduce poverty. One reason for this lack of success is that welfare spending is badly misallocated. Another is that welfare spending actually creates poverty.

  •  In 1990 government anti-poverty spending equaled $184 billion.
  • In 1990 it would have cost only $75 billion to bring every family with an income below the poverty level up above that benchmark. Hence, government was spending two-and-a-half times what would be needed to end poverty in America.
  • However, after that $184 billion was spent, some 30 million Americans remained below the poverty level.
  • More than half of all welfare recipients had pre-welfare incomes above the poverty level.
  • The welfare industry intercepts a huge portion of anti-poverty funds. In cities such as Milwaukee, there are now 62 separate welfare programs, each with its own bureaucratic costs.

All told, since the early 1960s, government at all levels has spent $3.5 trillion on programs for the poor. Yet there are more poor in 1993 than there were in 1963. Sadly, there is much truth to the adage that America has fought a war on poverty, and poverty won.

Civilian Employees

Government bureaucracy has grown at a steady pace at the federal, state, and local levels. In the past 20 years private sector union membership has shrunk, while public sector unions have record membership. Most of this growth in public employment has been at the state and local levels.

Today there are 18 million civilian government employees, up from 8.5 million ill 1960 and 4.5 million in 1940. For the first time ever, in 1992 there were more civilian public sector employees than manufacturing employees in the U.S., as shown in Figure 11.

Figure 11

Government Employment Outpacing Manufacturing Employment

With the growth in the number of government workers, America has witnessed a growth in government payrolls:

  • In 1940 government spent $5 billion on monthly payroll.
  • In 1960 government spent $14 billion on monthly payroll.
  • In 1990 government spent $36 billion on monthly payroll.

Although the 1980s are conventionally believed to have been a decade of hardship for public employees, the truth is that on the state and local levels government pay went up much faster than private sector pay. A 1992 report by the American Legislative Exchange Council (ALEC) shows:

Average state and local government employee compensation (including wages, salaries, and employee benefits) has been rising more quickly than average private employee compensation for 40 years . . . . Average state and local government employee compensation increased by an inflation- adjusted 14.6 percent, or $4,031, in 1989 compared to 1980. For every new dollar of average compensation increase for private sector employees, state and local government employees received more than $4.20.

Hence, today the compensation for public employees in many areas and many occupations is significantly above that of private sector workers. The government is a very generous employer, as illustrated by the following examples:

  • The average public sector bus driver earns 70 percent more than the average private sector bus driver.
  • Reliable studies show that postal workers make fully one-third higher salaries and benefits than comparably skilled private sector workers.
  • The voluntary quit rate from the federal government was lower in 1987 than the private sector quit rate during the peak of the Great Depression when unemployment rates exceeded 20 percent.
  • The average pay for a New York City school janitor is $57,000, with some earning as much as $80,000.
  • After 15 years on the job, the average New York City employee receives 51 days off, including holidays, vacation time, sick leave, and so on. That is, some New York city employees work the equivalent of 4 days a week.

As the ALEC study concludes, America’s government workers have become “a protected class.” Unfortunately, for the taxpayers who pay their inflated salaries, these workers are a rapidly growing protected class.

Military Employees

These numbers do not include the largest government employer of all: the military. Indeed, the U.S. Department of Defense is the largest employer in the United States—public or private. The number of Americans employed in the armed services has continually risen:

  • In 1800 there were 7,000 military personnel.
  • In 1850 there were 20,000 military personnel.
  • In 1900 there were 125,000 military personnel.
  • In 1950 there were 1,500,000 military personnel.
  • In 1990 there were 2,200,000 military personnel.

These numbers do not include any of the civilians who work for defense contractors producing weapons, providing equipment, and performing research and development. If these indirect government workers, part of the military-industrial complex, were included, the employment numbers could easily double.


American government has far outgrown the limits set by our founders in the Constitution. If the twenty-first century is to be the American century, government must be redirected to its proper and legitimate role. The growth of government is the greatest tragedy of the twentieth century.

For a copy of the complete report from which this essay is taken, please contact The Institute for Policy Innovation.


Stephen Moore

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145,000 Jobs Added in December, Unemployment at 3.5%

The U.S. economy added 145,000 jobs in December, while the unemployment rate remained at 3.5%, according to Department of Labor data released Friday.

In December, 145,000 jobs were added, according to the Bureau of Labor Statistics report—about 121,000 fewer jobs than were added in November.

Decembers’ unemployment rate remained steady at 3.5%, matching September’s unemployment rate, the lowest since December 1969.

Economists had predicted that 164,000 jobs would be added and that the unemployment rate would remain at 3.5%, according to CNN, about 100,000 jobs fewer than the previous month when a General Motors strike ended and boosted job numbers.

Job growth has come back strong after February, when just 33,000 jobs were added.

The unemployment rate has held steady between 4% and 3.7% for more than a year before the April jobs report showed it drop to 3.6%. Prior to April’s report, the consistent unemployment rate suggested that workers are jumping back into the workforce to fill open jobs, rather than the workers who are currently collecting unemployment welfare, according to The Wall Street Journal.

RELATED ARTICLE: Unemployment Claims Hit 50-Year Low

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Why is the Dems’ Progressive Caucus obsessed with protecting the Post Office?

“The USPS is bleeding red ink and the company’s finances will likely get worse. The Trump administration is correct that ‘USPS’s current model is unsustainable’.” – Chris Edwards,

I receive, on a weekly basis, at least one fundraising email from the Progressive Caucus outraged that there are efforts to reign in the spending by the United States Postal Service (USPS). The Progressive Caucus is obsessed about the destruction of “yet another vital public service.” But there are other companies that provide mail delivery services that make the USPS look archaic. Yes, there are. Among them are: Amazon, E Bay, FedEx and UPS.

QUESTION: Would not competition improve this vital service?

Is USPS a Disaster?

In a July 9, 2029 column title Privatizing the U.S. Postal Service Chris Edwards wrote:

The U.S. Postal Service (USPS) is a large business enterprise operated by the federal government. It has more than 600,000 employees and more than $70 billion in annual revenues. Revenues are supposed to cover the postal service’s costs, but mail volume is plunging, and the USPS has been losing billions of dollars a year for more than a decade.

The USPS has a legal monopoly over letters and mailboxes. That policy is an anomaly because the federal government’s general economic stance is to encourage open competition in markets. The USPS monopoly means that entrepreneurs are prevented from entering postal markets to try and improve quality and reduce costs for consumers. [Emphasis added]

USPS’s Predicament

Edwards points out the following about USPS:

Congress confers on the USPS monopolies over the delivery of first-class mail and access to mailboxes, the latter of which is a unique protection among the world’s postal systems.

The USPS also enjoys a range of other benefits:1

  • It can borrow up to $15 billion from the U.S. Treasury at low interest rates.
  • It is exempt from state and local sales, income, and property taxes, and from parking tickets, vehicle fees, and other charges.
  • It pays federal corporate income taxes on its earnings from competitive products, but those taxes are circulated back to the USPS.2
  • It is not bound by local zoning laws, is immune from a range of civil actions, and has the power of eminent domain.
  • It has government regulatory power, which it can use to impede competitors.

On the other hand, Congress ties the hands of the USPS in many ways that prevent it from operating like a private enterprise. Congress restricts the USPS’s pricing flexibility, requires it to provide expansive employee benefits, imposes collective bargaining, and prevents it from cutting costs in various ways, such as by reducing delivery frequency and closing low-volume post offices.

Read more.

Incremental Reforms

Edwards in his column recommends the following reforms of the USPS:

  1. Close Post Office Locations.
  2. Cut Labor Costs.
  3. End Collective Bargaining.
  4. Narrow the Universal Service Obligation (USO).
  5. End Cross Subsidies.


Edwards concludes with:

The [Trump] administration’s Task Force found that the USPS’s current business model “is unsustainable and must be fundamentally changed if the USPS is to avoid a financial collapse and a taxpayer-funded bailout.”61 The GAO said that a “comprehensive package of actions is needed to improve USPS’s financial viability.”62 That comprehensive package should be privatizing the USPS and opening U.S. postal markets to competition.

As Barry Goldwater wrote in his book “The Conscience of a Conservative“:

“I have little interest in streamlining government or in making it more efficient, for I mean to reduce its size. I do not undertake to promote welfare, for I propose to extend freedom. My aim is not to pass laws, but to repeal them. It is not to inaugurate new programs, but to cancel old ones that do violence to the Constitution, or that have failed their purpose, or that impose on the people an unwarranted financial burden. I will not attempt to discover whether legislation is “needed” before I have first determined whether it is constitutionally permissible. And if I should later be attacked for neglecting my constituents’ “interests,” I shall reply that I was informed that their main interest is liberty and that in that cause I am doing the very best I can.”

Perhaps it it time to reduce the size of government starting with the USPS?

Midwest Grocery Chain Supports Good Values and Great Customer Service

A false narrative among the Left is that you cannot provide great customer service without being “woke” enough. Chick-fil-A discovered this when its recent abandonment of socially conservative charity groups was greeted with dismissal by the radical LGBT group GLAAD. Apparently, in the eyes of the woke Left, being America’s most polite fast-food chain, providing quality food, and putting customers first isn’t good enough if you’re not exactly the right kind of great food provider.

So, Chick-fil-A bailed. But not everyone else has. The Midwest grocery chain Schnucks (4) is expanding its customer service while still supporting the values of The Salvation Army.

Unlike Chick-fil-A, grocery chain Schnucks isn’t abandoning The Salvation Army or its customers. The company has announced the continuation of its charitable partnership with The Salvation Army through a “round-up” donation system where consumers can round purchases to the nearest dollar. Schnucks donated 100 percent of the rounded dollars – over $200,000 in 2018 – to The Salvation Army.

Schnucks’ dedication to charity hasn’t left customers behind. The company is expanding curbside pickup services to 59 stores through a partnership with Instacart. Now customers will be able to shop faster than ever – and they won’t have to worry about the company abandoning their values as Chick-fil-A did.

Schnucks has proven, charity and customer quality can and should go hand-in-hand. Chick-fil-A used to know that – so let’s make sure Schnucks never forgets. Buy from Schnucks to thank them for showing corporate America how to balance profits and principals.


The Company Contrast – Walmart

The Company Contrast – The Home Depot

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THE ECONOMY: The Big White Elephant in the Room

If you are wondering why the Democrats in Congress are so aggressively resisting President Trump, look no further than the big white elephant in the room, the economy.

More than anything, the Democrats are terrified of the president’s accomplishments in terms of the economy as it poses the single biggest threat to their regaining control of the House, along with winning the Senate and Presidency. They have been putting on a full court press against the president in the hopes the American taxpayer will forget the prosperity triggered by Mr. Trump’s policies.

This is why Speaker Nancy Pelosi (D CA-12) made her formal request for articles of impeachment on Thursday, December 5th; one day before the release of the Labor Department’s December report on job growth, the second-biggest monthly gain in the Trump presidency. Knowing such a report of prosperity would hurt them politically, the Democrats tried to preempt it by calling for impeachment, thereby disrupting the news cycle.

If you will excuse the pun, the economy represents the Trump card for the 2020 presidential election. The Democrats have tried to run from it, take credit for it, say that is was a flash in the pan, even calling it a total failure. There is one problem, the Democrats are offering no alternatives other than Socialism and skyrocketing taxes, which would likely cause the economy to go into a tailspin. The Democrats fully understand the political importance of a prosperous economy on the American public, and know it is the biggest obstacle to their success, which explains why we are faced with an impeachment based on flimsy charges and evidence

These diversionary tactics have been going on since Mr. Trump assumed the presidency. To illustrate:

First, the Democrats claimed it was President Obama’s policies, not President Trump’s, that pointed the economy in the right direction. In reality, President Obama’s true economic record doesn’t come anywhere close to President Trump’s, and the Democrats know this, but hope they can fool the public. To illustrate, everyone knows manufacturing stalled out at the end of President Obama’s term, yet it has been experiencing a Rennaisance under President Trump. According to Barron’s just one year ago, “2018 was the best year for manufacturing job growth in the U.S. since 1997. Factories added 264,000 workers in 2018, up from 176,000 workers in 2017.” It was even better in 2019

Even the Washington Post, one of the president’s chief antagonists, had to reluctantly admit the economy is booming, “The November and December data is preliminary, so the numbers could change, but without a doubt, it’s a great result: the largest annual gain in manufacturing jobs since the Great Recession wiped out nearly 1.4 million just in 2009.”

Second, the Democrats insist the United States is going into a recession. This is nothing more than political spin. If you study the data, this is simply not true. It is scary the Democrats want to panic the public with a doom-and-gloom scenario, but this is politics and they hope it will trick people into voting for them. Whether you like President Trump or not, it is disturbing the Democrats want to see the country fail.

Third, the Democrats would have us believe the Trump tax cuts only benefit the rich. The tax cuts helped John Q. Public in terms of putting more money in their pockets, which invigorated consumer confidence and led to the largest holiday spending spree in history, thereby propelling business and jobs even farther.

It has also brought more jobs back to our shores. As Bloomberg recently admitted, “Corporations have brought back more than $1 trillion of overseas profits to the U.S. since Congress overhauled the international tax system and prodded companies to repatriate offshore funds, a report showed Thursday.” And even more is on the way. It is no small wonder the unemployment numbers have declined sharply, particularly for African-Americans, Latinos, Asians, and women, which will help President Trump at the ballot box, all of which terrifies the Democrats.

The Reshoring Initiative, a group which monitors jobs returning to our shores, insists President Trump is setting records for companies returning jobs to our shores. All of this translates into more jobs, a higher Gross Domestic Product (GDP), and prosperity for everyone.

It is likely the Democrats will try other diversionary tactics in order to dissuade people from voting for the president. I suspect, they will make some obscure claims that the stock markets, which have reached historic highs recently, will flounder and decline, or maybe claim it is slow and grew faster under Democrat administrations. They may also delay pending trade deals, all of which helps American workers.

All of these false claims and political histrionics is aimed at diverting Americans from the big white elephant in the room, the economy, which will ultimately torpedo Democrat fortunes in 2020, a year of reckoning for them. This is why they refuse to discuss it. We should be celebrating the economy, as opposed to trying to torpedo it. The American public will look past the facade, and likely re-elect the president, making him the most effective president since Theodore Roosevelt.

Just remember, “It’s the economy, stupid!”

Keep the Faith!

P.S. – Also do not forget my books, “How to Run a Nonprofit” and “Tim’s Senior Moments”, both available in Printed and eBook form.

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The 20 Biggest Advances in Tech Over the Last 20 Years

Despite what you may read in the newspapers or see on TV, humans continue to reach new heights of prosperity.

Another decade is over. With the 2020s upon us, now is the perfect time to reflect on the immense technological advancements that humanity has made since the dawn of the new millennium.

This article explores, in no particular order, 20 of the most significant technological advancements we have made in the last 20 years.

  1. Smartphones: Mobile phones existed before the 21st century. However, in the past 20 years, their capabilities have improved enormously. In June 2007, Apple released the iPhone, the first touchscreen smartphone with mass-market appeal. Many other companies took inspiration from the iPhone. As a consequence, smartphones have become an integral part of day-to-day life for billions of people around the world. Today, we take pictures, navigate without maps, order food, play games, message friends, listen to music, etc. all on our smartphones. Oh, and you can also use them to call people.
  2. Flash Drives: First sold by IBM in 2000, the USB flash drive allows you to easily store files, photos or videos with a storage capacity so large that it would be unfathomable just a few decades ago. Today, a 128GB flash drive, available for less than $20 on Amazon, has more than 80,000 times the storage capacity of a 1.44MB floppy disk, which was the most popular type of storage disk in the 1990s.
  3. Skype: Launched in August 2003, Skype transformed the way that people communicate across borders. Before Skype, calling friends or family abroad cost huge amounts of money. Today, speaking to people on the other side of the world, or even video calling with them, is practically free.
  4. Google: Google’s search engine actually premiered in the late 1990s, but the company went public in 2004, leading to its colossal growth. Google revolutionized the way that people search for information online. Every hour there are more than 228 million Google searches. Today Google is part of Alphabet Inc., a company that offers dozens of services such as translations, Gmail, Docs, Chrome web browser, and more.
  5. Google Maps: In February 2005, Google launched its mapping service, which changed the way that many people travel. With the app available on virtually all smartphones, Google Maps has made getting lost virtually impossible. It’s easy to forget that just two decades ago, most travel involved extensive route planning, with paper maps nearly always necessary when venturing to unfamiliar places.
  6. Human Genome Project: In April 2003, scientists successfully sequenced the entire human genome. Through the sequencing of our roughly 23,000 genes, the project shed light on many different scientific fields, including disease treatment, human migration, evolution, and molecular medicine.
  7. YouTube: In May 2005, the first video was uploaded to what today is the world’s most popular video-sharing website. From Harvard University lectures on quantum mechanics and favorite T.V. episodes to “how-to” tutorials and funny cat videos, billions of pieces of content can be streamed on YouTube for free.
  8. Graphene: In 2004, researchers at the University of Manchester became the first scientists to isolate graphene. Graphene is an atom-thin carbon allotrope that can be isolated from graphite, the soft, flaky material used in pencil lead. Although humans have been using graphite since the Neolithic era, isolating graphene was previously impossible. With its unique conductive, transparent, and flexible properties, graphene has enormous potential to create more efficient solar panels, water filtration systems, and even defenses against mosquitos.
  9. Bluetooth: While Bluetooth technology was officially unveiled in 1999, it was only in the early 2000s that manufacturers began to adopt Bluetooth for use in computers and mobile phones. Today, Bluetooth is featured in a wide range of devices and has become an integral part of many people’s day-to-day lives.
  10. Facebook: First developed in 2004, Facebook was not the first social media website. Due to its simplicity to use, however, Facebook quickly overtook existing social networking sites like Friendster and Myspace. With 2.41 billion active users per month (almost a third of the world’s population), Facebook has transformed the way billions of people share news and personal experiences with one another.
  11. Curiosity, the Mars Rover: First launched in November 2011, Curiosity is looking for signs of habitability on Mars. In 2014, the rover uncovered one of the biggest space discoveries of this millennium when it found water under the surface of the red planet. Curiosity’s work could help humans become an interplanetary species in just a few decades’ time.
  12. Electric Cars: Although electric cars are not a 21st-century invention, it wasn’t until the 2000s that these vehicles were built on a large scale. Commercially available electric cars, such as the Tesla Roadster or the Nissan Leaf, can be plugged into any electrical socket to charge. They do not require fossil fuels to run. Although still considered a fad by some, electric cars are becoming ever more popular, with more than 1.5 million units sold in 2018.
  13. Driverless Cars: In August 2012, Google announced that its automated vehicles had completed over 300,000 miles of driving, accident-free. Although Google’s self-driving cars are the most popular at the moment, almost all car manufacturers have created or are planning to develop automated cars. Currently, these cars are in testing stages, but provided that the technology is not hindered by overzealous regulations, automated cars will likely be commercially available in the next few years.
  14. The Large Hadron Collider (LHC): With its first test run in 2013, the LHC became the world’s largest and most powerful particle accelerator. It’s also the world’s largest single machine. The LHC allows scientists to run experiments on some of the most complex theories in physics. Its most important finding so far is the Higgs-Boson particle. The discovery of this particle lends strong support to the “standard model of particle physics,” which describes most of the fundamental forces in the universe.
  15. AbioCor Artificial Heart: In 2001, the AbioCor artificial heart, which was created by the Massachusetts-based company AbioMed, became the first artificial heart to successfully replace a human heart in heart transplant procedures. The AbioCor artificial heart powers itself. Unlike previous artificial hearts, it doesn’t need intrusive wires that heighten the likelihood of infection and death.
  16. 3D Printing: Although 3D printers as we know them today began in the 1980s, the development of cheaper manufacturing methods and open-source software contributed to a 3D printing revolution over the last two decades. Today, 3D printers are being used to print spare parts, whole houses, medicines, bionic limbs, and even entire human organs.
  17. Amazon Kindle: In November 2007, Amazon released the Kindle. Since then, a plethora of e-readers has changed the way millions of people read. Thanks to e-readers, people don’t need to carry around heavy stacks of books, and independent authors can get their books to an audience of millions of people without going through a publisher.
  18. Stem Cell Research: Previously the stuff of science fiction, stem cells (i.e., basic cells that can become almost any type of cell in the body) are being used to grow, among other things, kidney, lung, brain, and heart tissue. This technology will likely save millions of lives in the coming decades as it means that patients will no longer have to wait for donor organs or take harsh medicines to treat their ailments.
  19. Multi-Use Rockets: In November and December of 2015, two separate private companies, Blue Origin and SpaceX, successfully landed reusable rockets. This development greatly cheapens the cost of getting to space and brings commercial space travel one step closer to reality.
  20. Gene Editing: In 2012, researchers from Harvard University, the University of California at Berkeley, and the Broad Institute each independently discovered that a bacterial immune system known as CRISPR could be used as a gene-editing tool to change an organism’s DNA. By cutting out pieces of harmful DNA, gene-editing technology will likely change the future of medicine and could eventually eradicate some major diseases.

However you choose to celebrate this new year, take a moment to think about the immense technological advancements of the last 20 years, and remember that despite what you may read in the newspapers or see on TV, humans continue to reach new heights of prosperity.

This article was reprinted from Human Action.


Alexander Hammond

Alexander C. R. Hammond is a researcher at a Washington D.C. think tank and Senior Fellow for African Liberty. He is also a Young Voices contributor and frequently writes about economic freedom, African development, and globalization.


#GIRLBOSS Author Left School, Built $100 Million Company

The New York Times Reveals the Horrors of Capitalism—By Showing China’s State-Run Hospitals

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Good Policy Matters: U.S. Wage Growth Is Soaring — Fastest At The Low End

Good policies result in good outcomes. And bad policies lead directly to bad outcomes.

So, Obamacare and attendant taxes and penalties as policies were a disaster, and the results of it were terrible for healthcare costs and a wreck for the economy, which saw the slowest recovery after a recession ever in history and general malaise over the American public. And is normally the case with progressive policies, those hurt the most were the ones supposedly meant to be helped.

On the other side, tax cuts and deregulation are good policies and, ipso facto, they are being great for the economy, businesses, the unemployment rate and wages. Yes, wages. An area where Democrats and progressives lecture us unceasingly about how the rich are the only ones benefiting from Trump tax cuts and the little guy is getting crushed while the middle class is shrinking. This is a talking point in every Democratic debate.

Except that was true during the Obama years. And they know this. A close observer will note that when any data is actually used in this discussion, it often encompasses the Bush (recession) and Obama years and stops there. Because bad policies. But in every conceivable metric, things are better in the Trump years because of good policy. It’s not about nice guys or mean guys, or black guys or white guys or presidential guys or non-presidential guys. It’s about policy. And we are in the grand slam realm with the economy.

You frequently hear that black and Hispanic unemployment are at all-time record lows, along with the unemployment rate. That’s true and due to good policy. But more rarely do you hear about the wages — except when Democrats push the $15-per-hour minimum wage, pretending everything is stagnant because they simply cannot run on the truth.

So here is another nail in the coffin of bad policy. Wages across the board are growing much faster than the cost of living, but growing the fastest at the low end. According to Nick Bunker, an Economist at the Indeed Hiring Lab who focuses on the U.S. labor market, writing in September (the numbers have all improved even faster since then, and even these numbers have since been adjusted upward):

Before assuming that the total job growth number in August is skewed because of Census hiring, remember that these are real jobs taken by real workers. Even if you remove government hiring, which accounts for around 34,000 jobs, this is still a number that is high enough to keep up with population growth. This month’s report reflects a slowing labor market but not necessarily one heading straight for a recession.

What’s interesting is that Bunker’s bio shows him to be a man of the progressive left. He was previously a Senior Policy Analyst at the Washington Center for Equitable Growth, a leftwing economics think tank. Prior to that, he was a Research Assistant at the Center for American Progress, a progressive activist think tank founded by Clinton confidant John Podesta.

But here’s his money paragraph:

In fact, wage growth continues to be strongest for workers in lower-wage industries. Labor force participation grew in the month, signaling a labor market still drawing workers off the sidelines. Job seekers are still benefiting from this job market, but let’s not count on this lasting forever.

So his look at the numbers shows that Trump’s policies are working incredibly well for low-wage workers — the very people that critics of tax reform and deregulation said would be hurt the most. His progressive heart’s spin is that it can’t last. But there’s a pretty good chance he’s been saying that all along. New York Times columnist and economist Paul Krugman has been talking about tanking markets and a recession or depression since the day Trump took office, literally, and still is. Progressives.

At least Bunker is honest enough to publish an accurate study of the numbers. And notice that he includes continued growth in the labor participation rate, which means people who may have given up back during the Obama years have jumped in and found work, and more continue to do so every month. This pool is part of the reason wages have not been rising faster. A lot of people had given up during the Obama years.

This is also shown in the Atlanta Fed’s Wage Growth Tracker. The first chart below shows that the median wage growth for the lowest quartile of wage-earners had been growing slower throughout the 2000s, until just the last few years, and then it began growing faster.


The faster median wage growth for lower-wage workers is also seen in what is called the relative median wage level of these workers. The chart below shows the median wage level for people in the lowest wage quartile (25 percent) relative to the median for all workers in the Wage Growth Tracker dataset. The chart again shows that for “workers in lower-wage jobs, their relative median wage over the 2000s has deteriorated, and that erosion has reversed course only in the last few years,” according to the Atlanta Fed.


So this shows that the lowest wage earners are moving ahead faster than the rest of the pack since roughly when Trump took office. Much faster. That is crippling to the Democrats’ argument that only rich people are getting ahead and working Americans are falling behind.

To wit, another wages metric is the “real wage,” which Bernie Sanders deplored during the last presidential debate as a lousy 1.1 percent. Sanders used sleight of hand of real wages on purpose to make Democratic voters think he was saying wages, and of course he could count on the media playing along or just being ignorant.

The real wage increase is the increase in wages minus the increase in costs of living. The goal here is to keep it in positive territory. Since 1980, it has averaged 0.3 percent. So it is actually right now nearly four times higher than the long-term average. Sanders was deceiving, but the reality is that that number shows just how successful good policies are.

Finally, in the 16 years prior to Trump’s presidency, inflation-adjusted incomes rose by about $1,500. In the eight years that George W. Bush was president, median income barely moved, up just $401 due largely to the wipeout by the deep recession of 2008. Taking out the first six months of Obama’s presidency as the recession effects lingered, incomes under Obama over 7½ years moved up only $1,043.

But in Trump’s less than three years in office, inflation-adjusted incomes galloped forward more than $5,000, according to the Census Bureau Current Population Survey data. In fact, median household income has now reached $65,976 – up more than 8 percent in 2019 dollars under the Trump presidency. And “median” captures the picture accurately because using “average” can be skewed at the extremes.

We play politics on the presentation. If you’re a Democrat, it’s about skin color and gender first, for everyone it is about likability, appearances, and other superficialities. That is about all the media covers in any depth. But it’s really more about creating policies to ensure that all Americans can pursue the dream of liberty in prosperity.

In that category, Trump has been the best president in a long time because his policies have delivered. There is no debating the results. They are astonishingly good for Americans.


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California’s Latest Act of Idiocy: Killing Freelance Work

If there’s one thing the California government is good for these days, it’s failing to address crises that glaringly exist while creating new crises that shouldn’t exist—and then shifting the blame when everything goes wrong.

A new California law set to go into effect in the new year is the latest example of misguided legislation hurting the very people it was aimed to “protect” in the Golden State.

The law, Assembly Bill 5, puts severe restrictions on who is qualified to be an independent contractor or freelancer. The law puts heavy restrictions on how much work freelancers can do before being considered full-time workers.

The legislation was passed to reduce the negative impact of the “gig economy,” where workers do various jobs on their own time but don’t get the benefits or long-term employment guarantees of a traditional, full-time job.

Next year, absolutely everything is on the line. Defend your principles before it is too late. Find out more now >>

The problem is, it appears that instead of aiming to hire more full-time workers, companies are simply getting rid of freelancers and independent contractors in favor of a smaller number of full-time employees.

Of course, the freelancer law has major implications for ride-sharing services like Uber—which is battling the law and working with other companies to amend it with a ballot initiative—but it’s having a huge impact on freelance writers in particular.

Vox Media, which supported the new law, announced that it would be doing away with most of its California contractors who provide content for its sports websites on SB Nation.

“In the early weeks and months of 2020, we will end our contracts with most contractors at California brands,” SB Nation Executive Director John Ness wrote in a postaccording to Fox Business.

“This shift is part of a business and staffing strategy that we have been exploring over the past two years, but one that is also necessary in light of California’s new independent contractor law, which goes into effect Jan. 1, 2020.”

There’s no question as to where the problem lies: The new law limits freelance contributions to 35-a-year to a single company, which in many cases is a tiny number for freelancers.

Billy Binion, writing for Reason, pointed out what this means for writers:

“The 35-piece per publication limit comes out to less than one piece per week. Anyone who writes a weekly column, for instance, is likely out of a job if their publisher cannot hire them as an employee.”

Businesses and publishers in general now have an incentive to stay away from California workers and writers.

“If I’m a publisher from out of state,” said David Swanson, a San Diego writer who is the outgoing president of the Society of American Travel Writers, according to the Los Angeles Times, “and I have a choice of hiring a writer from California to do a job, or somebody from Colorado or Texas or Canada or India—and I’d have no chance of being sued—who do you think I’m going to hire? AB 5 simply makes it unattractive to hire writers from California.”

The gig economy might not be the best arrangement for everyone, but needlessly killing thousands of jobs is the last thing California lawmakers should be doing. The impact on businesses will likely be bad, but for those now out of a job in the new year, it will be far worse.

For many, the flexibility of independent contract work is highly appealing and in some cases necessary.

As Laura Baxter wrote for The Federalist, the law could fall particularly hard on parents, students, and the disabled. For others, freelancing is an important supplement to income that will now be lost.

And for those who pursue the dream of writing for a living, freelance work is often the only opportunity to do so. With this law, many California writers are now being forced to choose between ending that dream or leaving the state.

California, the richest state in the union, is seemingly perfecting the art of encouraging mass homelessness and putting people out of work. (And right behind it is New York, which may soon be adopting a similar law.)

Instead of blaming their problems on President Donald Trump, maybe California leaders ought to reexamine the broken ideology that has caused their state—which has every advantage of wealth, climate, and geography—to become a national laughingstock whose residents can’t get out fast enough.



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A Note for our Readers:

As progressives on the far Left continue to push for greater government control under the disguise of “free stuff,” our lawmakers need conservative research and solutions to guide them towards promoting your principles instead.

That is why we’re asking conservatives to unite around the key values of limited government, individual liberty, traditional American values, and a strong national defense by making a special year-end gift to The Heritage Foundation before December 31.

Next year, absolutely everything is on the line. The Left won’t pull any punches. They stand ready to trade the principles of the American founding for the toxic European socialism that has failed so many times before.

That is why finishing this year strong is so critical. The Heritage Foundation is challenging you to rise up and claim more victories for conservative values as we battle socialism in 2020.


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6 Reasons for Optimism in 2020

We have much to be grateful for and many reasons to be ecstatic about continued human progress.

The 2010s have been the best decade ever. The evidence is overwhelming.”

Those are the words of Cato Institute senior fellow Johan Norberg, penned in an op-ed for the Wall Street Journal.

Norberg’s words seem hyperbolic at first glance, but he may be right. In many ways, the world is getting better every day, and at an explosive rate. This is contrary to mainstream sentiment, where pundits clamor about democracy falling apart, climate catastrophe threatening our very existence, and capitalism failing us.

Yet, the proof is in the pudding, as they say. Data show the past decade has been a story of human flourishing and progress. Here are 6 facts about human progress that give us reason to be optimistic heading into 2020:

Extreme poverty rates—defined as living on less than $1.90 per day—are falling and continue to fall. From 1990 to 2015, the global extreme poverty rate fell from 36 percent to 10 percent. In 2018, it fell to 8.6 percent. This means more than 137,000 people escape extreme poverty every day.

This might not shock you at first, but consider that September 2018 was the first time in human history that more than 50 percent of the global population was considered middle class, which amounts to about 3.8 billion people. One huge benefit of this is the demand the middle class places on the global economy, resulting in more entrepreneurial opportunities and increased commerce.

To put this in perspective, only 1.8 billion were considered middle class in 2009. That’s only 26 percent of the global population, meaning proportionally, the percentage of total global population considered middle class grew 92 percent from 2009 to 2018.

As Norberg also states in his WSJ column,

Global life expectancy increased by more than three years in the past 10 years, mostly thanks to prevention of childhood deaths. According to the U.N., the global mortality rate for children under 5 declined from 5.6% in 2008 to 3.9% in 2018. A longer perspective shows how far we’ve come. Since 1950, Chad has reduced the child mortality rate by 56%, and it’s the worst-performing country in the world. South Korea reduced it by 98%.

Norberg also addresses the question, “Hasn’t this all come at the cost of a despoiled environment?” “No,” he says. “At a certain point developed countries start polluting less.” To make the point, he cites the falling rate of climate-related mortalities.

Death rates from air pollution declined by almost a fifth world-wide and a quarter in China between 2007 and 2017, according to the online publication Our World in Data.

Annual deaths from climate-related disasters declined by one-third between 2000-09 and 2010-15, to 0.35 per 100,000 people, according to the International Database of Disasters—a 95% reduction since the 1960s. That’s not because of fewer disasters, but better capabilities to deal with them.

Data from the World Bank show continued progress in the world’s poorest countries, especially in the past two decades. Access to basic drinking water has increased, as has electricity, sanitation, and clean cooking fuel. Data also show decreasing rates of poverty and childhood mortality.

Burdensome and onerous regulations can prevent individuals from starting their own business, which is one of the best ways to alleviate poverty. Not only is it tricky for the entrepreneur to navigate around excessive red tape, it also ends up costing them more. Thankfully, the cost of starting a business has drastically declined, especially in developing economies. In low- and middle-income economies, the average cost of starting a business was 141.76 percent of income-per-capita in 2004. In 2019, it is now just 30.85 percent.

P.S. Here is an infograph Norberg shared on his Twitter account.


Tyler Brandt

Tyler Brandt is an Associate Editor at FEE. He is a graduate of UW-Madison with a B.A. in Political Science. In college, Tyler was a FEE Campus Ambassador, President of his campus YAL chapter, and Research Intern at the John K. MacIver Institute for Public Policy.


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W. James Antle III, editor of The American Conservative. A former Senior Writer at TAC, Antle also previously served as managing editor of the Daily Caller, editor of the Daily Caller News Foundation, and associate editor of the American Spectator. He is the author of Devouring Freedom: Can Big Government Ever Be Stopped? Antle has appeared on Fox News, CNN, MSNBC, and NPR, among other outlets, and has written for a wide variety of publications, including the Wall Street Journal, Politico, the Week, the Los Angeles Times, the Boston Globe, the Daily Beast, the Guardian, Reason, the Spectator of London, The National Interest, and National Review Online. He is also senior advisor to Defense Priorities.

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Charles Lehman is a staff writer for the Washington Free Beacon. He writes about policy, covering crime, law, drugs, immigration, and social issues.

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California’s War on Gig Work Falls Hardest on Women

California’s Assembly Bill 5 has already had an adverse impact on the state’s freelance writers, approximately two-thirds of whom are women.

This year, California’s progressives decided to wage war on the nightmare of being your own boss. A new state law aimed at limiting the gig economy has already cost hundreds of people their jobs—and had a seriously harmful impact on women’s earnings and long-term happiness.

Assembly Bill 5 curbs the ability of companies like Uber and Lyft to classify their workers as independent contractors. The law, which codifies the California Supreme Court’s Dynamex decision into law, means companies in the $1 trillion gig economy would have to hire freelancers as employees and give them benefits, including healthcare coverage. Governor Gavin Newsom signed the bill into law on September 18. It takes effect on January 1.

The companies say that kind of change threatens their business model and could mean bankruptcy. It also means their newly designated employees can be unionized, a boon for organized labor. Teamsters organizers have already begun laying the groundwork.

But the law contains a provision that limits freelance writers to submitting 35 articles per outlet each year. (The bill’s author admits the number is “arbitrary.”)

Media outlets that rely on independent content producers are scrambling to comply with the law before it takes effect in a few days—and one of them, Vox, announced it will engage in a round of mass firings.

The bill’s author, Democratic Assemblywoman Lorena Gonzalez, said her goal is to “preserve good jobs,” but only those that pay “a livable, sustainable wage job.” Vox apparently did not fall into that category.

The hundreds of workers Vox laid off have the opportunity to apply for the new, full-time jobs the company just announced—20 of them.

Freelancers who love what they do can keep writing, explained John Ness, executive director of the Vox-owned website SB Nation, but they “need to understand they will not be paid for future contributions.”

Thanks to government intervention, hundreds or thousands of authors will lose their most viable source of income.

Freelance authors blame the law, not their employers, for turning their lives upside down. CNBC reports:

A writer named Rebecca Lawson, who covered the NBA’s Dallas Mavericks from San Diego, wrote a post on Monday titled, “California’s terrible AB5 came for me today, and I’m devastated.” Lawson, who was editor-in-chief of the blog Mavs Moneyball, said she would be forced to step down as of March 31.

“SB Nation has chosen to do the easiest thing they can to comply with California law — not work with California-based independent contractors, or any contractors elsewhere writing for California-based teams,” Lawson wrote. “I don’t blame them at all.”

The Hollywood Reporter shares the story of Arianna Jeret:

[Jeret], who contributes to relationship websites and The Good Men Project, says freelance writing has helped support her two children and handle their different school schedules. Her current gigs — covering mental health, lifestyle and entertainment — allow her to work from home, from the office and even from her children’s various appointments. “There were just all of these benefits for my ability to still be an active parent in my kids’ lives and also support us financially that I just couldn’t find anywhere in a steady job with anybody,” she says.

Similarly, author Kassy Dillon tweeted:

Not all those opposed to the new law are women, by any stretch of the imagination. Aaron Pruner, whose clients include The Washington Post, said, “Working with a baby at home is easier to do when I have my own schedule to work from, as opposed to a 9 to 5.”

But women bear the brunt of the government-imposed limit. Two-thirds of U.S. freelancers across industries are female, according to PayPal’s “U.S. Freelancer Insights Report.”

Curiously, the bill carved out vast exemptions. The San Francisco Chronicle revealed that lawmakers exempted a series of higher-paying professions including

doctors, psychologists, dentists, podiatrists, insurance agents, stock brokers, lawyers, accountants, engineers, veterinarians, direct sellers, real estate agents, hairstylists and barbers, aestheticians, commercial fishermen, marketing professionals, travel agents, graphic designers, grant writers, fine artists, enrolled agents, payment processing agents, repossession agents and human resources administrators.

But the politicians made no provision for freelance writers, despite months of heavy lobbying.

Freelance work empowers women to choose how they spend their time. Female workers have repeatedly told pollsters from across the globe—as far as Australia and Denmark—that their top workplace desire is the flexibility to create greater work-life balance. Some 40 percent of women say they would take a lower salary in exchange for more control over their schedule.

Freelancing lets women choose the hours they work and gives them control over their schedule. They may opt out of working altogether when someone gets ill, only to work night-and-day at other times, based on their needs and wishes. But the right to unionize Uber drivers has denied them that goal.

Employment is about more than a paycheck. Surveys show unemployment has a longer, more harmful impact on members of both sexes than any other adverse life effect, including divorce and widowhood. “For unemployment, there is a negative shock both in the short and long-run,” reports Our World in Data.

Unemployment also affects the human person in ways too profound to be measured by an earnings statement, poll, or survey. “Unemployment almost always wounds its victim’s dignity and threatens the equilibrium of his life,” says the Catechism of the Catholic Church. “Besides the harm done to him personally, it entails many risks for his family.” Pope Francis has been outspoken about the dangers of idleness. “There is no peace without employment,” he said on the sixtieth anniversary of the Treaty of Rome.

There is no peace for California’s freelance writers, approximately two-thirds of whom are women. This is yet another example of how economic interventionism destroys jobs, harms women, and leaves hundreds of families unable to support themselves and saddled with long-term psychological burdens.

This article is reprinted with permission from the Acton Institute.

Ben Johnson

Rev. Ben Johnson is a senior editor at the Acton Institute. His work focuses on the principles necessary to create a free and virtuous society in the transatlantic sphere (the U.S., Canada, and Europe).

EDITORS NOTE: This FEE column is republished with permission. All rights reserved.

New York City Experienced Worst Decline in Restaurant Jobs since 9/11 After $15 Minimum Wage Win

The Big Apple’s fast-food industry, The New York Times recently reported, has long served as a laboratory for progressive politicians and the nation’s labor machine.

But new economic research suggests their latest experiment is not going as planned.

Data show that following the labor movement’s “Fight for $15” victory, which imposed steep annual increases in mandatory wages for workers, New York City experienced its sharpest decline in restaurant jobs in nearly 20 years.

Restaurants tend to operate on famously low profit margins, typically 2 to 6 percent. So a 40 percent mandatory wage increase over a two-year period is not trivial.

In response to the minimum wage hikes, New York City restaurants did what businesses tend to do when labor costs rise: they increased prices and reduced labor staff and hours.

For example, Lalito’s, a popular restaurant on Bayard Street, recently raised its menu prices 10-15 percent, Eater New York reports.

A New York City Hospitality Alliance survey also showed that three out of four full-service restaurants said they planned to reduce employee hours. Nearly half of those surveyed said they planned to eliminate some job positions in 2019.

In response, New York City council members are trying to shield restaurant employees from “unfair” firings. Labor lawyer Michael J. Lotito, whose firm represents the restaurant industry, told The Times that a “just cause” firing provision for fast food employers “would be a first in the country.”

Regardless of whether or not the firings are “fair,” the data are clear: restaurant workers are losing jobs.

Recently published data from the American Enterprise Institute, a right-leaning Washington, DC, think tank, show that full-service restaurant employment declined for the first time in a decade in 2018. That year also saw the sharpest month-to-month annual decline since the attacks of 9/11.

“December 2018 restaurant jobs were down by almost 3,000 (and by 1.64%) from the previous December,” wrote economist Mark Perry, “and the 2.5% annual decline in March 2018 was the worst annual decline since the sharp collapse in restaurant jobs following 9/11 in 2001.”

Perry says this “restaurant recession” is likely the result of the series of mandatory wage hikes that brought the city’s minimum wage to $15 an hour.

New York’s experience is noteworthy since numerous states have passed or are in the process of passing a $15 pay floor. Illinois and New Jersey recently passed laws mandating a $15 minimum wage—they will be phased in over several years, similar to New York’s law—joining California, Massachusetts, and of course New York. The Maryland House of Delegates advanced a $15 pay floor by voice vote Wednesday. The District of Columbia and some cities, including Seattle and Minneapolis, have also passed $15 minimum wage laws.

Considering the latest results of New York’s $15 minimum wage experiment, lawmakers and activists should consider Mary Shelley’s great moral lesson: beware the monsters we create ourselves.


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