Escape from New York: Big Government Is Chasing Away the Small Businesses It Doesn’t Kill

Big government is crushing small business owners around the nation, punishing decades of hard work and job creation. Too few people speak up as the burdens of the regulatory and nanny states slam down upon them, but every now and then I hear from someone in trouble.

Most recently, I received a call from New York City businessman Eli Amsel. In 2016, he told a New York State Assembly committee that he was inspired to start his own business thanks to his grandfather—a Holocaust survivor—who impressed upon him the value of freedom and the opportunity to pursue the American dream. “And that’s why I had this inspiration, and I made it work, and I’m here 34 years later, after toiling all these years,” he said. Amsel launched his business in 1982 from the basement of his father’s Brooklyn home.

Since then, Amsel has been selling unbranded plastic and paper bags to a variety of shop owners, and he spent decades building his client base. Certainly not a “get-rich-quick” scheme, it required driving the city from one shop to another, finding the right products, and building relationships with shop owners. As the business grew, Amsel began shipping with UPS, hiring workers, and he bought a warehouse to store his products. He had something he hoped to pass on to his three children and eight grandchildren, but now he’s worried that part of that dream may never materialize.

Despite the growing economy, Amsel says his business is down by 20 percent because New York’s regulatory environment is crushing him. In particular, during the past several years, the regulatory state has delivered a triple whammy: an insanely high minimum wage hike, bag taxes, and now a possible ban on his key product—plastic bags.

Goodbye American dream; hello regulatory nightmare.

In this first of two posts about Amsel, we’ll take a look at one of his biggest challenges: minimum wage laws. Supposedly such laws are implemented to help employees, but they do more to put people out of work or reduce their hours than anything else. These laws kill small businesses that would otherwise provide jobs.

Signed by Gov. Andrew Cuomo in 2016, the state began phasing in a minimum wage hike starting in December 2017 that will ultimately increase to $15 per hour over the next year and a half. Businesses with more than 11 employees must comply by December 2018, and businesses with 10 or fewer workers have until December 2019. See the chart below from the New York Department of Labor website for details.

Other states and localities are also imposing such anti-employee, anti-business wage increases, including Seattle, Washington, and the entire state of California. The results are not good.

Minimum wage laws often force employers to make tough decisions to stay afloat, such as cutting the number of employees and/or work hours. A study conducted in the state of Washington showed that minimum wage laws in Seattle actually reduced worker income because employers reduced the number of hours employees could work. Some people dispute the findings of this study with questionable claims of their own, but it’s really only common sense. No one needs a study to understand that when labor costs are artificially increased, businesses have to find ways to offset them, and obviously that does not help workers.

New York’s law created the perverse incentive for small businesses that have just above 10 employees to cut their employee numbers down to 10 immediately to avoid the fee increase for at least one year, after which they may have to cut more or reduce hours.

That’s what Amsel had to do—eliminate four jobs to bring his total employees below 10. So while some of his employees may have gotten a “raise,” four were left without jobs. And he had to drastically cut the hours and eliminate some paid holidays for his remaining employees. And once December 2019 arrives, he may have to consider reducing hours or eliminating more employees.

Amsel is not alone. The minimum wage hike is harming lots of businesses—closing down historic mom-and-pop neighborhood eateries, and forcing other business to flee to other states.

Restaurants are being hit hard in New York as well. As the wage law is phased in, the tip-based approach for wait staff is largely being replaced by a $10-per-hour salary, plus a guaranteed $5-an-hour in tips the employer must pay if tips don’t amount to that much. This will likely change how dining establishments operate. Expect to see more at-table computerized ordering and fewer wait staff. Such automation is fine when restaurants choose to do it, but many restaurants will basically be forced into making such changes because they won’t be able to afford the labor.

It’s no wonder people are leaving New York.

Some local lawmakers have started to catch on. Although Democratic politicians have traditionally supported minimum wage laws, Washington, D.C.’s largely Democratic (eleven Democrats and two left-of-center Independents) city council is trying to repeal a voter initiative increasing the minimum wage to $15 in the nation’s capital. Apparently, they don’t want to see D.C.’s economic health go down the drain.

Amsel tells me that he would like to see Congress and the president take a similar action nationally—essentially repealing such state and local minimum wage laws by passing legislation to preempt them. He’s got a point. If the Democratic D.C. Council is willing to take a stand, why not Congress? You can learn more about his story in this YouTube video and this New York Daily News story.

Reprinted from the Competitive Enterprise Institute.

More than half of refugees in U.S. receive food stamps

Screenshot (620)

Click on the image to read the full report.

That is from a recent Center for Immigration Studies report by Jason Richwine who analyzed the most recent Office of Refugee Resettlement Annual Report to Congress.

More than half of the annual inflow of foreign refugees arriving in the United States are on food stamps, a government report reveals.

Since 2008, as Breitbart News reported, the U.S. has permanently resettled more than 1.7 million foreign nationals and refugees through a variety of humanitarian programs like the Special Immigrant Juveniles and the Nicaraguan Adjustment and Central American Relief Act. This is a foreign population larger than Philadelphia, Pennsylvania — a city with more than 1.5 million residents.

An annual report by the Office of Refugee Resettlement was analyzed by the Center for Immigration Studies’ Jason Richwine, in which the analyst revealed that about 56 percent of households headed by foreign refugees who arrived in the U.S. between 2011 and 2015 are using taxpayer-funded food stamps.

Nearly 30 percent of refugees received cash welfare of some sort, while 34 percent of refugees 18-years-old or older said they had no health insurance. Of the refugees who said they did have health insurance, about 50 percent said they were either on Medicaid or Refugee Medical Assistance, both of which are taxpayer-funded.

More here.

Frankly I suspect the numbers are much worse.

The sampling used by the Office of Refugee Resettlement is tiny and dependent on how many of the refugees they can find via phone calls and how many will even participate by answering questions if they are found.

A large number are not even participating in the survey because of language barriers.

We have told you about the Annual Reports for years. Here is just one post in 2013 where we reported that food stamp use was 70% in Obama’s first year in office—2009!

Even in spite of the possible under counting in the welfare use sections, the reports are treasure troves of information for those of you trying to better understand how the refugee program works and what it might be doing to your towns and cities.

One of the things you will see in the reports is information on how many other grants and goodies the contractors receive over and above their per refugee head payment.

The US is no doubt importing poverty, something that the designers of the original Refugee Act of 1980 promised would not happen.

And, if you are saying to yourselves that new immigrants aren’t supposed to be eligible for welfare, remember that prohibition does not apply to refugees!

Below is the table from the 2016 Annual Report:

Screenshot (621)

SNAP is of course food stamps. Note that nearly 20% receive Social Security disability benefits—yikes!

Screenshot (622)

Next after food stamps, taxpayers fund medical care for a very large percentage of refugees.

Just so you know we admitted 69,933 refugees to the US in FY2015 and for the whole accounting period above (FY11 through FY15) the total was 324,508 according to data at Wrapsnet.

Cutting numbers is a good start and we applaud the President, but the whole program must be reformed.

Do it now!

Contact the White House and tell the President what you think! See contact link in right hand sidebar here at RRW.

5 of the Worst Economic Predictions in History

Uncertainty makes human beings uncomfortable. Not knowing what’s going to happen in the future creates a sense of unrest in many people. That’s why we sometimes draw on predictions made by leading experts in their respective fields to make decisions in our daily lives. Unfortunately, history has shown that experts aren’t often much better than the average person when it comes to forecasting the future. And economists aren’t an exception. Here are five economic predictions that never came true.

Irving Fisher was one of the great economists of the first half of the 20th century. His contributions to economic science are varied: the relationship between inflation and interest rates, the use of price indexes or the restatement of the quantity theory of money are some of them. Yet he is sometimes remembered by an unfortunate statement he made in the days prior to the Crash of 1929. Fisher said that “stock prices have reached what looks like a permanently high plateau (…) I expect to see the stock market a good deal higher within a few months.” A few days later, the stock market crashed with devastating consequences. After all, even geniuses aren’t exempt from making mistakes.

In 1968, biologist Paul Ehrlich published a book where he argued that hundreds of millions of people would starve to death in the following decades as a result of overpopulation. He went as far as far as to say that “the battle to feed all of humanity is over (…) nothing can prevent a substantial increase in the world death rate.” Of course, Ehrlich’s predictions never came true. Since the publication of the book, the death rate has moved from 12.44 permille in 1968 to 7.65 permille in 2016, and undernourishment has declined dramatically even though the population has doubled since 1950. Seldom in history has someone been so wrong about the future of humankind.

Economist Ravi Batra reached the number one on The New York Times Best Seller List in 1987 thanks to his book The Great Depression of 1990. From the title, one can easily infer what was the main thesis of the book, namely: An economic crisis is imminent, and it will be a tough one. Fortunately, his prediction failed to come true. In fact, the 1990s was a period of relative stability and strong economic growth, with the US stock market growing at an 18 percent annualized rate. Not so bad for an economic depression, right?

In September 2007, former Fed Chairman Alan Greenspan released a memoir called The Age of Turbulence: Adventures in a New World. In the book, he claimed that the economy was heading towards two-digit interest rates due to expected inflationary pressures. According to Greenspan, the Fed would be compelled to drastically raise its target interest rate to fulfill the 2 percent inflation mandate. One year later, the Fed Funds rate was at historical lows, reaching the zero-lower bound shortly after.

Financial commentator Peter Schiff became famous in the aftermath of the 2007-2008 Financial Crisis for having foreseen the housing crash back in 2006 (even a broken clock is right twice a day). Since then, he has been predicting economic catastrophes every other day, with very limited success. There are many examples of failed predictions from which to draw upon. For instance, in a 2010 video (see below), Schiff foretold that Quantitative Easing (the unconventional monetary policy undertaken by the Fed between 2008 and 2014) would result in hyperinflation and the eventual destruction of the Dollar. Unfortunately for Schiff, the average inflation rate per year since the onset of QE has been 1.68%, slightly below the 2% target of the Fed.

Reprinted from Intellectual Takeout.

COLUMN BY

Luis Pablo de la Horra

Luis Pablo de la Horra

Luis Pablo De La Horra holds a Bachelor’s in English and a Master’s in Finance. He writes for FEE, the Institute of Economic Affairs and Speakfreely.today.

Sanctuary Cities Are At War With DOJ — Here Are Their Corporate Enablers

One of the simmering legal fights over the last 20 months has been the one between sanctuary cities and the Department of Justice. Despite the fact that illegal immigrants commit serious crimes more frequently than do U.S. citizens, cities like Philadelphia continue the dangerous policy of releasing violent illegal immigrants instead of turning them over to federal authorities.

Fox News has the latest on a rapist and others who have been released by Philadelphia:

The Trump administration is taking aim at Philadelphia’s political leaders for a string of crimes committed by immigrants the city released in defiance of Immigration and Customs Enforcement requests.

The Justice Department this week highlighted the case of child rapist Juan Ramon Vasquez, who just pleaded guilty to illegal re-entry.

The illegal immigrant from Honduras previously was in Philadelphia custody on local charges back in 2014. But when those charges were dropped a year later, city officials ignored an ICE detainer. Vasquez was later arrested and convicted for raping a child and unlawful sexual contact with a minor.

Unfortunately, sanctuary cities aren’t acting alone. Their actions are supported by groups such as UnidosUS (formerly La Raza) and the Center for American Progress. And those groups can only support sanctuary cities because of their corporate backers.

This chain of support for lawbreaking must be halted. The Department of Justice continues to make its push on the legal front — it’s up to 2ndVote shoppers to hold corporate enablers accountable.

2ndVote’s research has found dozens of corporations donate to the Center for American Progress, Hispanic Federation, UnidoesUS, League of United Latin American Citizens, National Urban League, and the United States Hispanic Chamber of Commerce. All of these groups back sanctuary cities and illegal immigration. Below are several corporations which donate to two or more of these organizations:

Bank of America
HBO (Time Warner)
Jiffy Lube (Shell)
McDonald’s
Universal Pictures (Comcast)
Marriott International

We urge you to let these companies know that they must stop letting criminals off the hook. Let them know that they should put victims above criminals, not the other way around — or they’ll lose your business.


Help us continue providing resources like this and educating conservative shoppers by becoming a 2ndVote Member today!


RELATED ARTICLE: Another blast at Stephen Miller: shameless refugee pushers cry foul because Miller works the system

The Good Intentions Fallacy Is Driving Support for Democratic Socialism

“Concentrated power is not rendered harmless by the good intentions of those who create it.” – Milton Friedman

hile Venezuela continues to collapse into a living hell for all but Nicolás Maduro and ruling elites, support in America for democratic socialism continues to rise.

Photo: New York Times.

Graphic reports such as the recent New York Times photo essay about starvation in Venezuela abound:

Kenyerber Aquino Merchán was 17 months old when he starved to death.

His father left before dawn to bring him home from the hospital morgue. He carried Kenyerber’s skeletal frame into the kitchen and handed it to a mortuary worker who makes house calls for Venezuelan families with no money for funerals.

Kenyerber’s spine and rib cage protruded as the embalming chemicals were injected… relatives cut out a pair of cardboard wings from one of the empty white ration boxes that families increasingly depend on amid the food shortages and soaring food prices throttling the nation. They gently placed the tiny wings on top of Kenyerber’s coffin to help his soul reach heaven—a tradition when a baby dies in Venezuela…

[H]is father, Carlos Aquino, a 37-year-old construction worker, began to weep uncontrollably. “How can this be?” he cried, hugging the coffin and speaking softly, as if to comfort his son in death. “Your papá will never see you again.”

If you are inclined to believe this is an isolated incident, reporters Meridith Kohut and Isayen Herrera disabuse you of your ignorance: “Hunger has stalked Venezuela for years. Now, it is killing the nation’s children at an alarming rate, doctors in the country’s public hospitals say.”

With reports like these, one wonders how support for socialism in America can be growing?

If some Americans are economically illiterate and ahistorical that would explain their support. If they have mistakenly identified Scandinavian countries as socialist, that would also offer an explanation.

Perhaps people are seeking more meaning in their lives and being part of a mass movement fills a void.

Some students have admitted to me they value being able to exercise power over others. Perhaps they see socialism as a means to acquire power?

These may be some of the explanations for increasing support for democratic socialism; and yet, there is another factor at work. Americans are increasingly allowing their thinking to be influenced by logical fallacies.

Charlie Munger is vice chairman of Berkshire Hathaway, the legendary conglomerate he controls with Warren Buffett. In a speech at Harvard University about human misjudgment, Munger tells of a surgeon who removed “bushel baskets full of normal gallbladders” and continued maiming patients for five years past the point he should have been removed.

Munger was curious. Was the doctor motivated by greed? Munger was surprised to learn that the maiming doctor “loved” his patients and was motivated by good intentions. Munger sought insight from a doctor who had been involved in the surgeon’s removal:

I said, “Tell me, did he think, here’s a way for me to exercise my talents,” this guy was very skilled technically, “And make a high living by doing a few maimings and murders every year, along with some frauds?” And he said, “Hell no, Charlie. He thought that the gallbladder was the source of all medical evil, and if you really love your patients, you couldn’t get that organ out rapidly enough.”

For the surgeon’s patients, his good intentions were of little comfort.

When doctors of the ailing George Washington bled him, they were motivated by good intentions; and their unscientific medical practice arguably hastened Washington’s death.

Politicians who trust their seat-of-the-pants good intentions inevitably become authoritarians. They are relying on the limits of their error-prone minds and not on proven principles that promote human flourishing.

Those who rely on their good intentions to guide their actions are arrogant rather than humble. They have little respect or understanding for, as Hayek put it in his essay “Individualism: True or False,” the “spontaneous collaboration of free men [that] often creates things which are greater than their individual minds can ever fully comprehend.”

When Hugo Chavez, the father of Venezuela’s nightmare, passed in 2013, President Carter praised Chavez’s bold leadership saying, “We came to know a man who expressed a vision to bring profound changes to his country to benefit especially those people who had felt neglected and marginalized.”

Carter never doubted Chavez’s good intentions. Indeed, Carter offered those intentions as exculpatory evidence excusing Chavez’s brutality:

Although we have not agreed with all of the methods followed by his government, we have never doubted Hugo Chavez’s commitment to improving the lives of millions of his fellow countrymen.

Professor Owen Williamson of the University of Texas at El Paso might say President Carter had fallen victim to the logical fallacy, The Argument from Motives: “Falsely justifying or excusing evil or vicious actions because of the perpetrator’s apparent purity of motives or lack of malice.”

In his book Capitalism and Freedom, Milton Friedman argued that there were two threats to freedom, external and internal. In 1962, Friedman pointed to the Soviet Union as an external threat. Seeing an internal danger, Friedman argued, is more difficult because it is “far more subtle”:

It is the internal threat coming from men of good intentions and good will who wish to reform us. Impatient with the slowness of persuasion and example to achieve the great social changes they envision, they are anxious to use the power of the state to achieve their ends and confident of their own ability to do so. Yet if they gained the power, they would fail to achieve their immediate aims and, in addition, would produce a collective state from which they would recoil in horror and of which they would be among the first victims.

That “concentrated power is not rendered harmless by the good intentions of those who create it” has become among Friedman’s most famous ideas. His warning is ignored today by those believing the “good intentions” of politicians, such as Bernie Sanders or congressional candidate Alexandria Ocasio-Cortez, will render their destructive policies harmless.

Friedman challenged his readers to consider, “Which if any of the great ‘reforms’ of past decades has achieved its objectives? Have the good intentions of the proponents of these reforms been realized?”

Related to the Good Intentions Fallacy is the Positive Thinking Fallacy. As Professor Williamson puts it, positive thinking is “an immensely popular but deluded modern fallacy of logos, that because we are ‘thinking positively’ that in itself somehow biases external, objective reality in our favor even before we lift a finger to act.”

Let us grant “good intentions” to today’s cadres of democratic socialists. Let us assume they are “thinking positively.” No matter. No good intentions or positive thoughts will overcome how reality works. The destructive outcomes of socialism will follow as history repeats itself.

COLUMN BY

Welfare Spending Did Not Decrease Poverty, Capitalism Did

Last September, I shared some very encouraging data showing how extreme poverty dramatically has declined in the developing world.

And I noted that this progress happened during a time when the “Washington Consensus” was resulting in “neoliberal” policies (meaning “classical liberal“) in those nations (confirmed by data from Economic Freedom of the World).

In other words, pro-market policies were the recipe for poverty reduction, not foreign aid or big government.

Sadly, the Washington Consensus has been supplanted. Bureaucracies such as the International Monetary Fund, the United Nations, and the Organization for Economic Cooperation and Development are now pushing a statist agenda based on the bizarre theory that higher taxes and more spending somehow produce prosperity.

To add insult to injury, some people now want to rewrite history and argue that free markets don’t deserve credit for the poverty reduction that already has occurred.

Esteban Ortiz-Ospina, writing for Our World in Data, wants readers to conclude that redistribution programs deserve credit.

…the share of people living in extreme poverty around the world has fallen continuously over the last two centuries. …many often say that globalization in the form of “free-market capitalism” is the main force to be thanked for such remarkable historical achievement. …this focus on “free-market capitalism” alone is misguided. …Governments around the world have dramatically increased their potential to collect revenues in order to redistribute resources through social transfers… The reach of governments has grown substantially over the last century: the share of total output that governments control is much larger today than a century ago.

And for evidence, Mr. Ortiz-Ospina included this chart.

shared a version of this data back in June, asserting that the explosion of social welfare spending made this “the western world’s most depressing chart.”

So does Ortiz-Ospina have a compelling argument? Does poverty go down as welfare spending goes up?

Nope. Johan Norberg points out that there is a gaping flaw in this argument. An enormous, gigantic hole.

Wow. This isn’t just a flaw. It’s malpractice. It’s absurd to argue that welfare spending in developed nations somehow led to poverty reduction in developing countries.

I hope Mr. Ortiz-Ospina is just an inexperienced intern because if he really understands the data, one might be forced to conclude that he’s dishonest.

But let’s set that issue aside. Johan closes his video by explaining that poverty in rich nations declined before modern welfare states. I want to expand on that point.

Johan cited Martin Ravallion, so I tracked down his work. And here’s the chart he put together, which I’ve modified to show (outlined in red) that extreme poverty basically disappeared between 1820 and 1930.

And guess what?

That was the period when there was no welfare state. Not only is that apparent from Our World in Data, it’s also what we see in Vito Tanzi’s numbers.

Here’s Tanzi’s table, which I first shared five years ago. And I’ve circled in red the 1880-1930 data to underscore that there was virtually no redistribution during the years poverty was declining.

The bottom line is that poverty in the western world fell during the period of small government. Yet some people want to put the cart before the horse. They’re making the absurd argument that post-1950s welfare spending somehow reduced poverty before the 1930s.

That’s as absurd as Paul Krugman blaming a 2008 recession in Estonia on spending cuts that took place in 2009.

P.S. For those who want U.S.-specific data, it’s worth noting that dramatic reductions in American poverty all occurred before Washington launched the so-called “War on Poverty.”

Reprinted from International Liberty.

Daniel J. Mitchell

Daniel J. Mitchell

Daniel J. Mitchell is a Washington-based economist who specializes in fiscal policy, particularly tax reform, international tax competition, and the economic burden of government spending. He also serves on the editorial board of the Cayman Financial Review.

Trump Further Chips Away at Obamacare by Expanding Short-Term Health Plans

The Trump administration moved Wednesday to expand health insurance options and affordability for Americans, with a new rule allowing cheaper new and renewable health insurance plans that consumers can use for up to a year.

The Department of Health and Human Services, Labor Department, and Treasury Department released the final rule that allows consumers to buy “short-term, limited duration” health insurance plans that are not subject to the Obamacare requirements. Consumers can have the plans for up to a year, instead of three months under the new rule.

The average monthly premium for an individual with a short-term plan in the fourth quarter of 2016 was $124, compared to $393 for an unsubsidized plan in the Obamacare exchange, according to HHS.

“They can be as much as 50-80 percent lower cost than the Affordable Care Act exchange plans,” Secretary of Health and Human Services Alex Azar told reporters Wednesday. “We believe this could provide relief for well over 1 million people.”

The new rule is largely a return to the existing rule before 2017, when Americans could keep the plans for almost a year, which changes as President Barack Obama was heading for the exit. To encourage more people to join the exchanges, Obama reduced short-term limited duration coverage to less than three months in an executive action just three weeks before leaving office.

The plans again cover an initial period of one year, as before Obama’s action. The difference is that the plans come with a renewable maximum period of no longer than three years.

Azar said he would like to see Congress repeal and replace Obamacare, but until then, he is going to work to expand more private choices for consumers. He said this would not undermine the Obamacare exchanges, where 87 percent of consumers are subsidized. But this does offer a choice for those who don’t qualify for subsidies, he said.

“If someone decides, ‘I’m paying too much for insurance I don’t value that gives me an inadequate benefit and I find what you allow to be offered here in the short-term, limited duration plans to be something that is more financially attractive and more attractive as a health benefit for me in terms of coverage,’ that type of voting with their feet, I would find quite meaningful,” Azar told The Daily Signal during the press conference Wednesday.

Azar also noted during the press conference the new rule requires more consumer notification of what the cheaper, short-term plans won’t cover.

“These may be a good choice for individuals, but they also may not be the right choice for everybody,” Azar said. “One of the things we are doing is requiring consumer protection notice on the plans. In fact, it’s a more robust notice than President Obama’s administration had on these very same plans to ensure the patient, the consumer, knows going in what they are getting and what they’re not getting through the plan.”

Beyond that, the plans will remain under state regulation, which can decide benefit or rate structure.

The low-cost, sometimes low-coverage, plans could be good for people transitioning from one job to another, students who anticipate a job but aren’t yet employed, independent contractors, and part-time workers, Azar said.

The administration has taken a strong step, but Congress should also act, said Marie Fishpaw, director of domestic policy studies at The Heritage Foundation.

“The Trump administration is right to provide more options to Americans who have suffered under Obamacare and, in many cases, been priced out of health coverage,” Fishpaw said in a statement. “States should have more authority to regulate short-term, limited duration health plans. Unwinding Obamacare’s damaging regulations is just the first step.”

President Donald Trump signed an executive order in October directing executive branch agencies to look for ways to increase choice and competition in the health care market.

A release of three recent reports by the Centers for Medicare and Medicaid Services found enrollment in the Obamacare exchanges is only stable for subsidized consumers, but has declined by 20 percent for nonsubsidized consumers. Meanwhile, premiums increased by 21 percent.

“We continue to see a crisis of affordability in the individual insurance market, especially for those who don’t qualify for large subsidies,” CMS Administrator Seema Verma said in a written statement. “This final rule opens the door to new, more affordable coverage options for millions of middle-class Americans who have been priced out of ACA plans.”

COLUMN BY

Portrait of Fred Lucas

Fred Lucas

Fred Lucas is the White House correspondent for The Daily Signal and co-host of “The Right Side of History” podcast. Send an email to Fred. Twitter: @FredLucasWH.


The Daily Signal depends on the support of readers like you. Donate now.


EDITORS NOTE: The featured image is of HHS Secretary Alex Azar. (Photo: Jonathan Ernst/Reuters/Newscom)

Adam Putnam Lies about the FairTax — Putnam looks more and more like a Charlie Crist republican

Adam Putnam launched the below ad titled “23% More” on July 24th, 2018. The ad attacks his Florida gubernatorial opponent Congressman Ron DeSantis for his support of the FairTax.

NewsMax reports in an article titled “New Adam Putnam Ad Hits DeSantis on 23% Sales Tax Plan” that the ad states:

“What would a 23 percent sales tax do to Florida’s economy?” asks the ad now on YouTube, dubbing DeSantis as “D.C. DeSantis.”

“If Congressman DeSantis had his way, everything would cost 23 percent more — groceries, gas, home purchases.”

“Congressman DeSantis sponsored legislation to increase sales taxes by 23 percent, hurting families, destroying jobs, devastating tourism. Washington is full of bad ideas and phony politicians. Ron DeSantis and his huge tax increase fit right in,” the ad continues.

Read more.

The problem is Putnam is lying.

Libertarian radio host Neal Boortz, who co-wrote “The FairTax Book,” responded to Putnam’s ad with a tweet: “If you are having trouble understanding the FairTax, perhaps you ought to comment me. I wrote the book.” He followed up, “The Adam Putnam campaign is LYING THROUGH ITS TEETH … and they know it.”

What Putnam doesn’t tell you is that Floridians will benefit from the FairTax because it will eliminate all federal taxes (income, estate, payroll, gift and business). Florida has no state income tax, which is a reason many people relocate to the Sunshine State. Let’s look at the chart below showing the current income tax brackets and rates to understand why Putnam is lying.

You will notice that individuals making more than $38,000 will actually see a tax decrease. Also note that the FairTax gives those below the federal poverty level (FPL) a quarterly refund of estimated sales taxes paid under the FairTax.

Here is the a table of percentages of the FPL guidelines.

Size of
Family Unit
48 Contiguous
States and D.C.
Alaska Hawaii
1 $12,140 $15,180 $13,960
2 16,460 20,580 18,930
3 20,780 25,980 23,900
4 25,100 31,380 28,870
5 29,420 36,780 33,840
6 33,740 42,180 38,810
7 38,060 47,580 43,780
8 42,380 52,980 48,750
For each additional
person, add
 4,320  5,400  4,970

The FairTax also eliminates all small business and corporate federal taxes. This saves Florida’s individuals, small business and corporations money by neither having to file tax returns nor hiring tax lawyers and accountants. In its annual survey of Tax Return Preparation Fee Averages, the National Society of Accountants reports the following average fees its members charged to prepare 2014 tax returns: 1040 with state return with no itemized deductions: $159. 1040 with Schedule A (itemized deductions) and state return: $273.

Additionally, Congress will lose its power to use taxes to reward and punish individuals and companies. Congress and career politicians will lose their ability to weaponize the IRS.

When your factor in all of these items it appears that the title of “D.C.” belongs to Putnam, not DeSantis. Putnam wants Floridians to continue to pay federal income taxes. Sounds like Putnam is still part of the swamp.

When the FairTax is implemented Florida will truly become an Income Tax Free state.

RELATED ARTICLE: Misleading Putnam ad twists DeSantis stance on taxes – PolitiFact

Starbucks Isn’t Alone: Straw Panic is Spreading Through Corporate America

Last week, we used Starbucks’ new anti-straw policy to highlight better coffee options for second vote advocates. Little did we know that anti-straw hysteria is spreading through corporate America and internationally.

According to several media reports, the below companies already graded by 2ndVote have taken stands against straws. Some of them did so in other countries; some are doing it domestically. All of them are overreacting, potentially making life more difficult for some disabled people and jumping on a bandwagon which was created by a nine-year old who made up a number after calling a few straw companies.

We’re serious. Major corporate policies are based upon a nine-year old’s phone calls. Cities such as San Francisco and Seattle have likewise implemented ban policies.

The hysteria abounds because of a third-grader using what we have to guess is Common Core math to say 500 million straws are used each day in America. As The Daily Wire’s Matt Walsh mockingly noted this week, issues such as drugs on city streets must be made secondary to straw prevention — or, at least, that seems to be the message from San Francisco and Seattle. Per Walsh:

Many cities and corporations are following suit. Another city in California will now hand out possible jail sentences to straw dealers. 15 seconds ago nobody worried about straws. Now there is a straw crisis and an anti-straw movement to answer it. Ordinances are being passed. Laws are being written. Hashtags are being hashtagged. Celebrities are recording PSAs. Straws are a scourge on the Earth, it has been decided randomly. And who could dispute this assessment? After all, Americans use 500 MILLION STRAWS A DAY.

Likewise, it seems as though corporations have solved all other corporate practices which affect the environment. American Airlines and Alaska Airlines must have found the perfect renewable fuel! Likewise, Disney must have discovered how to run all of those rides without using oil to keep them running. Marriott and Hilton have clearly found a way to recycle every bit of trash from their guests and — like the airlines — found the perfect renewable oil for thousands of airport shuttles. The new McDonald’s kiosks have to use no electricity, right?

And we can’t forget to praise Carnival Cruises for ensuring none of its boats ever run over a single aquatic animal or leak any waste into the water. One hundred percent sustainability, indeed!

Like Walsh, we are mocking. What’s not so humorous is that these policies are just another example of knee-jerk leftism being adopted by major corporations. Please tell them to stop at the links below:

Starbucks
McDonald’s
Hyatt
American Airlines
Alaska Airlines
Diageo
Hilton
Disney
Carnival Cruises
Marriott International


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Trump, EU Leader Agree to Work Toward ‘Zero Tariffs’

In what President Donald Trump called “a very big day for free and fair trade,” he and the leader of the European Union agreed Wednesday to work to end tariffs on nonautomotive products.

European Commission President Jean-Claude Juncker and Trump met at the White House, then went to the Rose Garden to announce not only a cease-fire but disarmament in what was turning into a trade war.

“Together, we are more than 50 percent of trade. If we team up, we can make our planet a better, more secure, and more prosperous place,” Trump said, later adding: “This is why we agreed today to, first of all, to work together toward zero tariffs, zero nontariff barriers, and zero subsidies on nonauto industrial goods.”

The two leaders’ agreement included resolving the tariffs on steel and aluminum imposed by the Trump administration, which the EU has retaliated against.

“I had the intention to make a deal today, and we made a deal today,” Juncker said. “We have identified a number of areas on which to work together. Work towards zero tariffs on industrial goods, that was my main intention, to propose to come down to zero tariffs on industrial goods. We’ve [also] decided to strengthen our cooperation on energy.”

At this point, the audience, including several members of Congress, began to applaud.

“The announcements today from President Trump and EU President Juncker were an encouraging first step to put the brakes on the trade war,” Tori Whiting, a trade economist at The Heritage Foundation who has written extensively on tariffs, told The Daily Signal in an email.

“The White House should immediately follow up its promises to eliminate tariffs on steel and aluminum for the EU and work to establish similar deals with other allies,” Whiting said. “The president should also suspend the national security investigation into automobile imports.”

The Rose Garden event was not initially on the president’s schedule, suggesting it was likely contingent on the outcome of talks between the two leaders.

Trump said the U.S. and EU would work to reduce trade barriers and increase trade on chemicals, pharmaceuticals, medical products, and soybeans.

Trump drilled down on soybeans after objections from farmers to several of the tariffs the administration has pushed.

“Soybeans is a big deal, and the European Union is going to start immediately to buy a lot of soybeans,” Trump said. “There is a tremendous market, [and the EU will] buy a lot of soybeans from our farmers in the Midwest primarily.”

The president continued:

This will open markets for farmers and workers, increase investment, and lead to greater prosperity for both the United States and the European Union. It will also make trade fairer and more reciprocal—my favorite word—reciprocal.

Trump and Juncker said the EU wanted to import more liquified natural gas from the United States, reform the World Trade Organization, and establish a joint working group to evaluate tariff measures. The two leaders agreed not to violate the spirit of the agreement before the final deal is reached.

“As far as agriculture is concerned, the European Union can import more soybeans from the U.S., and it will be done,” Juncker said. “And we have also agreed to work together on the reform of the WTO. Of course, it is on the understanding that as long as we are negotiating, unless one party stops the negotiations, we hold off further tariffs.”

Neither leader took questions from reporters.

COLUMN BY

Portrait of Fred Lucas

Fred Lucas

Fred Lucas is the White House correspondent for The Daily Signal and co-host of “The Right Side of History” podcast. Send an email to Fred. Twitter: @FredLucasWH.


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EDITORS NOTE: The featured image is of President Donald Trump and European Commission President Jean-Claude Juncker preparing to make a joint statement on trade Wednesday in the Rose Garden of the White House. (Photo: Kevin Dietsch/UPI/Newscom)

Earning Billions Impoverishes Nobody—Quite the Opposite

Donald J. Boudreaux

The fixed-wealth fallacy of redistributionists.

by Donald J. Boudreaux


The Quotation of the Day is from page 4 of Alan Reynolds’s excellent 2006 book, Income and Wealth (original emphasis):

The two young founders of Google, Larry Page and Sergey Brin, quickly made something like $12 billion each by greatly facilitating our information, education, and shopping efficiency. Why should anyone care how much money the founders of Google, Apple, or Microsoft made? Some might object that they earned a larger share of income, but in what sense can we regard their income as shared? Google is something new—without Google there could be no income from Google. The Google founders have their income and you have yours. What they earn has nothing to do with how much or how little you can earn, except that their invention may help you earn more (personally, I feel as though I owe them a really big check).

Indeed so.

People who obsess over differences in monetary incomes—people who leap from observing large differences in monetary incomes to the conclusion that something is thereby amiss and requires “correction” (always by giving a relatively small handful of people an enormously unequal share of power over others)—typically operate with the mistaken presumption that the amount of material wealth in the world is fixed. The very same mistaken presumption is at the core of most arguments against free trade. Neither the redistributionist nor the protectionist understands economic processes or economic growth.

Reprinted from Cafe Hayek

Donald J. Boudreaux

Donald J. Boudreaux

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

New Report Shows Every Congressional District Benefits From Tax Reform

What would you buy with $26,000? A new car? A year of college tuition? A down payment on a house?

This is not a hypothetical question. New research from The Heritage Foundation shows that the average American household can expect about $26,000 more in take-home pay over the next 10 years thanks to the tax reform that Congress passed last year.

But where can you find the “average” American? With Heritage’s new online tool, you can see how the Tax Cuts and Jobs Act will benefit the typical taxpayer in every congressional district. We’ve tailored our research to where you live. (Check it out here.)

The big takeaway? Wherever you live, typical taxpayers in every congressional district will see a tax cut in 2018.

You may have noticed this phenomenon already as your employer has started deducting less from your paycheck this year. The average American household can expect to pay about $1,400 less in taxes in 2018. But depending on where you live and how many kids you have, the numbers can look different.

In communities that had high tax bills last year, such as Palo Alto, California’s district (CA-18) represented in the House by Anna Eshoo, or one of New York City’s Manhattan districts (NY-12) represented by Carolyn Maloney, the average tax cut could be as much as $3,000.

Lower-income communities, such as areas near Phoenix, Arizona, (AZ-7) represented in the House by Ruben Gallego, as well as Philadelphia, Pennsylvania, (PA-2) represented by Dwight Evans, will see much larger percentage decreases in their tax bills. Tax reform benefited these communities by cutting their income taxes on average by 18 percent or more.

Moreover, Americans with children will benefit tremendously from the Tax Cuts and Jobs Act. A married couple filing jointly with two children will see their tax bills fall by $2,917.

The tax cuts, however, will have much larger effects than just letting Americans keep more of their money. Since tax reform passed, more than 600 companies have announced more jobs, more bonuses, higher wages, charitable giving, and new investments in the U.S. Many of them explicitly cited the tax cuts as the reason for the bonuses and investments.

Businesses are in the midst of the longest-running trend of adding jobs to the U.S. economy in our history.

In the coming years, the tax cuts will continue to raise wages, increase investment, and expand economic opportunities. Americans will in fact benefit twice from the tax cuts—once from paying less in taxes, and again from higher pre-tax incomes.

But this future is not certain. Many of the tax cuts expire after 2025, and some in Congress are determined to repeal them well before then. If the tax cuts are made permanent, our estimates suggest take-home pay after 2025 would be about 1 percent higher, corresponding to $600 per year for someone making the median U.S. income.

The Tax Cuts and Jobs Act is fundamentally important for Americans all across the country. It’s time to protect our paychecks and our financial well-being by telling Congress to make our tax cuts permanent.

COMMENTARY BY

Portrait of Adam Michel

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

Portrait of Parker Sheppard

Parker Sheppard focuses on dynamic economic modeling as a senior policy analyst in the Center for Data Analysis at The Heritage Foundation. Twitter: .

Portrait of Kevin Dayaratna

 

 

 

 

 

Kevin Dayaratna

Kevin D. Dayaratna specializes in tax, energy and health policy issues as senior statistician and research programmer in The Heritage Foundation’s Center for Data Analysis. Read his research. Twitter: .

RELATED ARTICLE: Podcast: Tax Reform Leads to More Cookies, Not Crumbs


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The Dark Continent and Africans for Energy

People in highly developed countries take energy for granted.

Try living without it.

Millions of Africans still live without electricity.  That needs to change.  Fast.

Two of CFACT’s most distinguished scholars, Paul Driessen and David Wojick, posted a pair of articles to CFACT.org you should know about.

They discuss international development banks.

The first titled “Multilateral anti-development banks” explains  how large development banks have abandoned the energy needs of people in Africa and the developing world and sacrificed them to climate ideology.  They placed the huge profits corporations make on climate ahead of people.

“Foreign Operations” appropriation bills now working their way through Congress supposedly provide funding to “advance U.S. diplomatic priorities overseas,” “increase global security,” and continue “life-saving global health and humanitarian assistance programs for the world’s most vulnerable populations.”

The bills include handsome funding for the World Bank and other so-called Multilateral Development Banks: some $1.8 billion in total. The United States is by far the World Bank Group’s largest donor, and a major funder of four other MDBs: the African Development Bank, Asian Development Bank, Inter-American Development Bank and European Bank for Reconstruction and Development.

In recent years, these banks have embraced manmade climate change alarmism as a key foundation for their lending policies. In particular, they refuse to fund the development of electric power generation via fossil fuels – thereby starving impoverished nations and families of desperately needed electricity.

Instead, the MDBs are pouring money into solar and wind power schemes that simply cannot produce affordable, reliable electricity on a large enough scale to help raise their client countries out of poverty.

Read more…

This is an outrage.

The second titled “Rejecting carbon colonialism” showcases a clear-headed example of bravery and hope.

We recently explained how Multilateral Development Banks (MDBs) use manmade climate change alarmism to justify lending policies that reject funding for fossil fuel electricity generation, promote expensive and unreliable renewable sources, and thereby help keep impoverished nations poor.

Now, in a daring show of humanity and common sense, the African Development Bank (AfDB) has broken ranks with the World Bank and its like-minded carbon colonialist brethren. The AfDB has announced that it will once again finance coal and natural gas power generation projects. As AfDB President Akinwumi Adesina puts it, “Africa must develop its energy sector with what it has.”

In a formal statement, Adesina noted: “The key challenge for Africa is the generation of power. The continent has the lowest electrification rate in the world. Power consumption per capita in Africa is estimated at 613 kWh per annum, compared to 6,500 kWh in Europe and 13,000 kWh in the United States. Power is the overriding African priority.

“The investment is expensive, yes, but the long-term returns will be much greater. To fast track universal access to electricity, the Bank is investing US$12 billion in the power sector and seeks to mobilize $45-$50 billion from other partners.”

Read more…

The big banks may have gone all-in on climate, but the “investments” they are financing will have no meaningful impact on global temperature, while causing real harm to people forced to live without energy.

The African Development Bank is wise to recognize this reality and to put its money on the side of providing real energy and genuine hope for Africa.

RELATED ARTICLE: Freedom from endangerment

The Western World’s Most Depressing Chart

Daniel J. Mitchell Western nations are abandoning the policies that made them prosperous.

by Daniel J. Mitchell

Last week, I shared a graph showing there are more guns than people in the United States, and I wrote that it was the “most enjoyable” chart of the year, mostly because it gets my leftist friends so agitated.

But I’m more likely to share gloomy visuals, including:

  • The “most depressing” chart about Denmark, which shows a majority of the population lives off the government.
  • A “very depressing” chart about the United States, which shows how big business profits from cronyism.
  • The “most depressing” chart about Japan, which shows the tax burden has nearly doubled since 1965.

Now it’s time to add to that list. There’s a website called Our World in Data, which is a great resource if you’re a policy wonk who likes numbers. But some numbers are quite depressing.

For instance, if you peruse the “Public Spending” page, you’ll find a chart showing the dramatic expansion of redistribution spending as a share of economic output.

These numbers are very similar to the table I shared from Vito Tanzi back in 2013, which isn’t surprising since Professor Peter Lindert is the underlying source for both sets of data.

While the above chart is depressing to a libertarian, it’s nonetheless instructive because it confirms my argument that the Western world became rich when governments were very small and redistribution was tiny or even nonexistent.

For instance, nations in North America and Western Europe largely made the transition from agricultural poverty to middle-class prosperity during the “golden century” between the Napoleonic wars and World War I. That was a period when redistribution spending basically didn’t exist, and most nations didn’t even have income taxes (the U.S. didn’t make that mistake until 1913).

Even as recently as 1960, welfare states were very small compared to their current size. Indeed, redistribution spending in Western nations averaged only about 10 percent of economic output, about half the size of today’s supposedly miserly American welfare state.

These points are important because some folks on the left misinterpret Wagner’s Law and actually try to argue that bigger government is good for growth.

P.S. South Korea has been a great success story for the past five decades, but that redistribution trendline is very worrisome.

P.P.S. The trendline for Greece helps to explain why that nation is bankrupt.

P.P.P.S. The chart shows that Canada is better than the United States, though that may not last since Canada’s current prime minister is seeking to undermine his nation’s competitive advantage.

P.P.P.P.S. While fiscal trends in the Western world have been unfavorable, that bad news has been offset by positive trends for trade liberalization. Whether we will see a big step backward because of President Trump remains to be seen.

Daniel J. Mitchell

Daniel J. Mitchell

Daniel J. Mitchell is a Washington-based economist who specializes in fiscal policy, particularly tax reform, international tax competition, and the economic burden of government spending. He also serves on the editorial board of the Cayman Financial Review.

Trump’s Fuel=Efficiency Reality Check Revs Up the American Economy

Despite rampant speculation that President Donald Trump’s trade policy might increase some car prices, how his regulatory relief agenda may lower sticker prices and increase safety goes largely ignored.

How did this happen? The Trump administration is revising the Corporate Average Fuel Economy standards imposed on automakers during the Obama era. In particular, they are no longer holding manufacturers to a 2025 fleet mandate of 54.5 miles per gallon.

When the rollback was first announced, Secretary of Transportation Elaine Chao declared it “a win for the American economy.” Then-EPA Administrator Scott Pruitt called it “good for consumers and good for the environment.”

While a victory for all consumers, it’s a particularly welcome relief to those in poor and minority communities looking to ascend the socio-economic ladder and get an equal shot at achieving the American Dream.

CAFE standards have been around for 40 years, but green crusaders in the Obama administration put them on steroids. During the Obama presidency, the industry was required to increase fuel efficiency by around nine miles per gallon. In 2012, it imposed a spike from 30.2 miles per gallon for a passenger car in model year 2011 to 60 miles per gallon over 14 years.

American car prices have risen steadily with higher CAFE standards. According to Heritage Foundation research, car prices rose while other big-ticket durable goods prices dropped.

“If vehicle prices had tracked furniture and appliance prices since 2007,” a 2016 Heritage study noted, “they would be 23.4 percent lower than they are today.”

Comparatively, the average cost of a car in the United States rose $6,200 above trending prices in other countries.

Higher prices lower opportunity. Those without much disposable income find themselves unable to afford new CAFE-friendly vehicles.

Using federal data, a National Automobile Dealers Association study concluded that between 3.1 and 14.9 million households might lack the credit necessary to buy a new vehicle under the original 2025 CAFE scenario. This fate would undoubtedly fall hardest on minority communities due to lower earnings.

And then there’s safety. One way to meet stringent fuel efficiency goals is to make vehicles smaller and lighter.

The Insurance Institute for Highway Safety explicitly warns that “bigger, heavier vehicles protect their occupants better.” That means those forced into the smaller cars are inherently less safe.

But all of this will at least help the environment, right? Maybe not.

Obama administration assertions about the effect of CAFE standards on climate change were both trivial and elusive. Then add mitigating factors such as poorer households keeping dirtier vehicles on the roads longer out of financial necessity.

Minority advocates embrace Trump’s CAFE relief. In a letter to Chao and Pruitt, the Project 21 black leadership network stated: “Excessive regulatory costs that make products unaffordable are one of the most significant non-racial obstacles to black economic progress … Increasing black hardship and jeopardizing driver safety for such a small payoff is simply irrational.”

Project 21 announced the policy shift was “Blueprint Compliant” with its new “Blueprint for a Better Deal for Black America”–that specifically recommended reforming CAFE standards–to improve black opportunity.

The industry also responded to consumer demand. Ford scaled back its CAFE-geared small sedans–retaining the Mustang and Focus Active crossover while favoring SUVs and light trucks. This is Ford’s family-friendly, workforce-ready, and consumer-focused fleet.

The Trump administration’s rollback of fuel efficiency mandates to favor the present-day economy over ambiguous predictions is a smart move. It promises more vehicles people want to safely transport their families, engage opportunities, and fuel the economy. It also respects the situations of the American consumer–particularly those at the lower rungs of the economic ladder.

COMMENTARY BY

Portrait of Derrick Hollie

Derrick Hollie is president of Reaching America and host of Reaching America on Demand podcast. The organization addresses complex social issues impacting African-American communities. Twitter: .

RELATED ARTICLE: Working With Green Groups, Local Governments Use This Kind of Lawsuit to Get Cash From Oil Giants

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With the recent conservative victories related to tax cuts, the Supreme Court, and other major issues, it is easy to become complacent.

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If we are to continue to bring this nation back to our founding principles of limited government and fiscal conservatism, we need to come together as a group of likeminded conservatives.

This is the mission of The Heritage Foundation. We want to continue to develop and present conservative solutions to the nation’s toughest problems. And we cannot do this alone.

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