I try to be self aware, so I realize that I have the fiscal version of Tourette’s. Regardless of the question that is asked, I’m tempted to blurt out that the answer is to reduce the burden of government spending.

But sometimes that’s exactly the right prescription, particularly for an economy weighed down by a bloated public sector. And, as you can see from this chart, the French welfare state is enormous.

Only Denmark has a bigger burden of government spending, but at least the Danes are astute enough to compensate with hyper-free market policies in other areas.

So is France also trying to offset the damage of excessive spending with good policy in other areas? Au contraire, President Hollande is compounding the damage with huge class-warfare tax hikes.

Here’s what the Wall Street Journal says about Hollande’s fiscal proposal—including the key revelation that spending will go up rather than down.

Remember all that euro-babble before the French election about fiscal “austerity” harming growth? Well, meet the new austerity, same as the old austerity, which means higher taxes on the private economy and token discipline for the state. Growth is an afterthought. That’s the lesson of French President François Hollande’s new “fighting” budget, which is supposed to reduce the deficit to 3% of GDP from 4.5% and represent the country’s toughest belt-tightening in three decades. …More telling is that two-thirds of the €30 billion in so-called savings is new tax revenue, and one-third comes from slowing spending growth. Total public expenditure—already the second most lavish in Europe—will increase by €6 billion to 56.3% of GDP.

The spending cuts are fictional, but the tax increases are very, very real.

The real austerity will be imposed on taxpayers, and not only on the rich. Income above €150,000 will now be taxed at 45%, up from the current 41%. Mr. Hollande’s 75% tax rate on income over €1 million comes into effect for two years, reaping expected (and predictably paltry) revenue of €200 million. That’s dwarfed by the €1 billion from reducing the threshold for the “solidarity” tax on wealth to €800,000 from €1.3 million. The French Socialists will also now tax investment income at the same high rates as regular income. The rates have been 19% for capital gains, 21% for dividends and 24% for interest income. If Mr. Hollande’s goal is to send capital out of France, that should help.

Anybody want to take bets, by the way, on whether the “temporary” two-year 75 percent tax rate still exists three years from now?

I say yes, in large part because the tax almost surely will lose revenue because of Laffer Curve effects. But rather than learn the right lesson and repeal the tax, Hollande will argue it needs to be maintained because revenues are “unexpectedly” sluggish.

It’s also remarkable that Hollande wants to dramatically increase tax rates on capital gains, dividends, and interest. These are all examples of double taxation.

And when you factor in the taxes at both the personal and business level, these charts show that France already has the highest tax on dividends in the developed world and the third-highest tax on capital. And Hollande wants to make a terrible system even worse. Amazing.

I’ve already predicted that France will be the next major economy to suffer a fiscal crisis. I was too clever to give a date, but Hollande’s policies are accelerating the day of reckoning.

P.S. The WSJ also takes some well-deserved potshots at the latest fiscal plan in Spain. Since I endorsed Hollande in hopes that he would engage in suicidal fiscal policy, this post is focused on the French fiscal plan. But Spain also is a disaster.

Politicians from Mike Huckabee to Michael Bloomberg to Michelle Obama have been hectoring Americans about their eating habits. (What is it about the name “Michael,” anyway, that seems to encourage paternalism and nanny-state politics? Well, it turns out that “Michael” comes from a Hebrew name meaning “Who is like God?” Maybe Michaels just get the idea that they are.)

But meanwhile, I was struck by this report buried in a Washington Post story titled “Obama showering Ohio with attention and money”:

[A] company making potato chips and other snack food about 100 miles from Cleveland … has received three Small Business Administration loans totaling $3.9 million since Obama took office, along with a $2 million loan during the Bush administration. In August, the agency’s head, Karen Mills, toured his facility for the launch of a kit that allows people to flavor their own gourmet potato chips. Last year, Biden singled him out in a speech near Cleveland.

So while the first lady stumps for healthy eating, administration appointees heap praise—and millions of tax dollars—on a company making potato chips. I think we should stop giving subsidies to all businesses and let them compete in a free market. But examples like this might lead even advocates of subsidies to wonder if this makes sense.

Washington Post reporters Jerry Markon and Alice Crites deserve kudos for turning the spotlight on the Obama administration’s use of taxpayer funds to curry voter favor in the critical battleground state of Ohio. Markon and Crites cite a laundry list of largess that has poured into the state in recent years:

[T]he state’s portion of the $2.3 billion in clean-energy manufacturing tax credits was tens of millions of dollars more than the slices that went to other swing states…

In high-speed rail, another administration priority, Ohio also fared well. The White House in 2010 awarded the state $400 million to resume passenger train service between Cincinnati, Cleveland and other cities, a service that had ended four decades earlier…

When Obama visited Mansfield in August, media outlets and Republicans in the state pointed out that he would be flying into an Air National Guard base where his budget had proposed cutting a fleet of aircraft and about 800 positions. By day’s end — after base officials vowed to position the threatened planes so Obama could see them from Air Force One — the White House said it would “find a mission” for the guard unit. A White House spokesman said Monday that Obama remains “absolutely” committed to finding that mission…

During his first visit to Ohio as president in March 2009, Obama brought more than $1 billion in stimulus money. With Attorney General Eric H. Holder Jr., he showed up for Columbus police graduation ceremonies and highlighted funding for everything from law enforcement to roads…

When it came to Obama’s proposal to invest $1 billion to create a network of ‘manufacturing ­innovation institutes,’ Congress declined to approve the funding. The administration forged ahead, funding a pilot program that will focus on digital-based manufacturing. The winner of the $30 million pilot grant was a consortium that said it would base the operation in Youngstown, Ohio…

Ohio has been a big winner in Race to the Top, the administration’s signature education reform initiative, taking home the fourth-highest total in federal grants of any state.

Then there are the Small Business Administration subsidies to Ohio businesses:

Brian Reis, who runs a company making potato chips and other snack food about 100 miles from Cleveland, says he is grateful for the attention. Reis, a Republican, has received three Small Business Administration loans totaling $3.9 million since Obama took office, along with a $2 million loan during the Bush administration. In August, the agency’s head, Karen Mills, toured his facility for the launch of a kit that allows people to flavor their own gourmet potato chips. Last year, Biden singled him out in a speech near Cleveland…

Then there was Joe Miceli, head of Miceli Dairy Products in Cleveland, which makes ricotta and other cheeses. He was the first to benefit from a new law that raised the limit for SBA loans for manufacturing from $2.5 million to $5.5 million, winning $5.49 million in December 2010. Two months later, Obama cited the loan at an event with small-business leaders in Cleveland. This year, the agency has approved 2,726 loans for Ohio businesses. That is nearly 500 more than Florida, a state with 7.3 million more people.

Uh-oh. Does Mrs. Obama know that the federal government is subsidizing companies that produce potato chips and fatty cheeses? Did the SBA not get the message from the First Lady’s office that the plebs are to be consuming leafy greens? But wisecracks aside, is entrepreneurship in this country so hard up that Uncle Sam needs to backstop loans to potato chip manufacturers?

Of course, the administration’s spokespeople all swear that the flow of federal funds into Ohio had nothing to do with politics. And perhaps little or none of the money was directly earmarked by the White House. But anyone who has ever spent more than a month working for the chief executive of a governmental unit knows that the king’s high servants earn their keep by making sure to maximize the political benefits of taxpayer handouts.

I would know.

Government subsidies often produce unintended consequences. The latest example comes from the New York Times, which reports that federal subsidizes to encourage doctors and hospitals to use electronic billing and recording records are leading to larger Medicare bills. That means that taxpayers are taking a double hit even though policymakers claimed that electronic record-keeping would make health care delivery more efficient, and thus less costly.

From the article:

Over all, hospitals that received government incentives to adopt electronic records showed a 47 percent rise in Medicare payments at higher levels from 2006 to 2010, the latest year for which data are available, compared with a 32 percent rise in hospitals that have not received any government incentives, according to the analysis by The Times…

Some experts blame a substantial share of the higher payments on the increasingly widespread use of electronic health record systems. Some of these programs can automatically generate detailed patient histories, or allow doctors to cut and paste the same examination findings for multiple patients — a practice called cloning — with the click of a button or the swipe of a finger on an iPad, making it appear that the physicians conducted more thorough exams than, perhaps, they did.

Critics say the abuses are widespread. “It’s like doping and bicycling,” said Dr. Donald W. Simborg, who was the chairman of federal panels examining the potential for fraud with electronic systems. “Everybody knows it’s going on.”

The Times also notes that the subsidies are a bipartisan creation:

Both the Bush and Obama administrations have encouraged electronic records, arguing that they help doctors track patient care. When used properly, the records can help avoid duplicate tests and remind doctors about a possible diagnosis or treatment they had not considered. As part of the economic stimulus program in 2009, the Obama administration put into effect a Bush-era incentive program that provides tens of billions of dollars for physicians and hospitals that make the switch.

But some critics say an unintended consequence is the ease with which doctors and hospitals can upcode — industry parlance for seeking a higher rate of reimbursement than is justified. They say there is too little federal oversight of electronic records.

Of course, now that government has treated a problem by creating a new one, policymakers will argue for more spending on “oversight.” Money for that will come from taxpayers, which means yet another hit for the poor rubes who always get stuck paying for the politicians’ schemes.

See this Cato essay for more on fraud and abuse in Medicare and other government programs.

Like too many other long-reigning fixtures on Capitol Hill, Senator Carl Levin (D‑MI) doesn’t appreciate the magnitude of the challenge to the authority he presumes to hold over America’s job and wealth creators. Or maybe he does, and frustration over that fact explains why he besmirches companies like Apple, Google, Microsoft, and Hewlett-Packard.

Levin presided over a Senate hearing last week devoted to examining the “loopholes and gimmicks” used by these multinational companies to avoid paying taxes – and to branding them dirty tax scofflaws. Well here’s a news flash for the senator: incentives matter.

The byzantine U.S. tax code, which Senator Levin – over his 33-year tenure in the U.S. Senate (one-third of a century!) – no doubt had a hand or two in shaping, includes the highest corporate income tax rate among all of the world’s industrialized countries and the unusual requirement that profits earned abroad by U.S. multinationals are subject to U.S. taxation upon repatriation. No other major economy does that. Who in their right minds would not expect those incentives to encourage moving production off shore and keeping profits there?

Minimizing exposure to taxes – like avoiding an oncoming truck – is a natural reaction to tax policy. Entire software and accounting industries exist to serve that specific objective. Unless they are illegal (and that is not what Levin asserts directly), the tax minimization programs employed at Apple, Google, Microsoft, and Hewlett-Packard are legitimate responses to the tax policies implemented and foreshadowed by this and previous congresses. If Levin is concerned about diminishing federal tax collections from corporations (which, of course, reduces his power), the solution is to change the incentives – to change the convoluted artifice of backroom politics that is our present tax code.

Combine the current tax incentive structure with stifling, redundant environmental, financial, and health and safety regulations, an out-of-control tort system that often starts with a presumption of corporate malfeasance, exploding health care costs, and costly worker’s compensation rules, and it becomes apparent why more and more businesses would consider moving operations abroad – permanently. Thanks to the progressive trends of globalization, liberalization, transportation, and communication, societies’ producers are no longer quite as captive to confiscatory or otherwise suffocating domestic policies. They have choices.

Of course many choose to stay, and for good reason. We are fortunate to have the institutions, the rule of law, deep and diversified capital markets, excellent research universities, a highly-skilled workforce, cultural diversity, and a society that not only tolerates but encourages dissent, and the world’s largest consumer market – still. Success is more likely to be achieved in an environment with those advantages. They are the ingredients of our ingenuity, our innovativeness, our willingness to take risks as entrepreneurs, and our economic success. This is why companies like Microsoft, Apple, Google, and Hewlett-Packard are born in the United States.

But those advantages are eroding.

While U.S. policymakers browbeat U.S. companies and threaten them with sanctions for “shipping jobs overseas” or “hiding profits abroad” or some other manifestation of what politicians like to call corporate greed, characterizing them as a scourge to be contained and controlled, other governments are hungry for the benefits those companies can provide their people. Some of those governments seem to recognize that the world’s wealth and jobs creators have choices about where they produce, sell, and conduct research and development. And some are acting to attract U.S. businesses with incentives that become less necessary every time a politician vents his spleen about evil corporations. Not only should our wealth creators be treated with greater respect from Washington, but we are kidding ourselves if we think our policies don’t need to keep up. As I wrote in a December 2009 Cato paper:

Governments are competing for investment and talent, which both tend to flow to jurisdictions where the rule of law is clear and abided; where there is greater certainty to the business and political climate; where the specter of asset expropriation is negligible; where physical and administrative infrastructure is in good shape; where the local work force is productive; where there are limited physical, political, and administrative friction.

This global competition in policy is a positive development.　But U.S. policymakers cannot take for granted that traditional U.S. strengths will be enough. We have to compete and earn our share with good policies.　The decisions made now with respect to policies on immigration, education, energy, trade, entitlements, taxes, and the role of government in managing the economy will determine the health, competitiveness, and relative significance of the U.S. economy in the decades ahead.

Since another hearing devoted to thanking these companies for their contriubtions to the U.S. economy is unlikely, perhaps Senator Levin should at least consider the perils of chasing away these golden geese.

The Romney campaign is airing a television ad in Florida, and similar ads in other states, accusing President Obama of pushing “defense cuts” that “threaten thousands of jobs.”

“Romney’s plan?” the narrator continues, “Reverse Obama’s defense cuts, strengthen our military, create over 700,000 jobs for Florida.”

PolitiFact decided to run Romney’s claim that Obama bears the blame for sequestration through their Truth-o-Meter. Their conclusion: Half true.

I agree. As I explained to PolitiFact researcher Angie Drobnic Holan, “The logic that lays the blame for sequestration at Obama’s feet, because he negotiated the [Budget Control Act] with GOP leaders in Congress, could just as easily apply to those other negotiators or, indeed, any member of Congress who voted for the BCA in August 2011.”

Although a majority of Republicans voted for the BCA, some members were opposed to raising the debt ceiling under any circumstance. Still others thought that the cuts were not deep enough. Notably, a few members of Congress voted against the BCA because they opposed even the possibility of Pentagon spending cuts. Those Republicans who voted in favor and are now having a case of “buyer’s remorse” can’t reasonably claim that they didn’t know that such cuts were possible, nor that the cuts are “Obama’s cuts.”

I wish that the PolitiFact folks had focused on Romney’s jobs numbers (they still might, I’m told) because they are grossly inflated. Under the sequestration provision of last year’s BCA, domestic discretionary and defense spending will each be cut by about $54 billion in FY2013. The claim that these cuts will result in massive job losses derives from several flawed studies commissioned by the Aerospace Industries Association (AIA) that have been discredited, including here, here, and here.

I have observed here that military spending cuts might actually be good for the economy. As with other government spending programs, military spending shifts resources from the private sector and/​or from some other agency within the public sector. In other words, government doesn’t create jobs so much as moves jobs from one industry to another or from one place to another. Gov. Romney understands this with respect to most other government spending, but he has an obvious blind spot when it comes to military spending. (I doubt that he would accept at face value the Chicago teachers union’s claims about the supposedly horrific effects that cuts in education spending would have on the wider economy, for example.)

I don’t blame the AIA (or the unions, for that matter) for peddling scary tales in order to reverse legislation that might cut into its members’ profits. That is, after all, what these companies pay the AIA to do: lobby the federal government to spend more taxpayer dollars on their clients/​members. I do fault Mitt Romney and others for falling victim to this ploy—and therefore reducing the likelihood that overall government spending will ever come down, as it should.

In a perfect world, politicians would be fighting with one another over who gets credit for cutting federal spending and reducing the burden of debt that we are piling onto the backs of our children and grandchildren. They should certainly stop trying to portray such cuts as massive or draconian, because they are anything but the sort (and PolitiFact might call them on that as well).

Sequestration isn’t the best way to cut out-of-control federal spending, but it might be the only way, as Dan Mitchell, Ben Friedman, and I explain in this recent video: