- Regulatory privilege is not consistent with competitive markets–that’s why Fannie Mae and Freddie Mac need reform.
- Thank goodness the U.S. Supreme Court found that education tax credits are not consistent with the fictitious notion of a “tax expenditure.”
- President Obama’s budget plan is not consistent with either his own deficit commission’s plan or the Constitution.
- The modern “Executive State” is not consistent with Article II of the Constitution.
- Cyberbullying laws are not consistent with the First Amendment and our concept of free speech:
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Who’s Saving the New Deal?
Back in 2008 Time depicted President-elect Obama as a new FDR, delivering the country a “new New Deal.”
This week National Review takes a different approach, portraying House Budget Committee chairman Paul Ryan as the architect of a new deal. (Hat tip to Charlie Spiering.)
In today’s Britannica column I have some thoughts of my own about Ryan, the Republicans, and the New Deal state:
In 1960 Sen. Barry Goldwater called the policies of the Eisenhower administration “a dime store New Deal”—a promise to deliver to the voters everything the Democrats promised, but at a discount. And that has been a fundamental dividing line in the Republican party ever since: Should the GOP challenge the Democrats’ fundamental commitment to an ever-bigger federal government, or only promise to deliver services more efficiently and at lower cost to taxpayers?…
Paul Ryan’s budget doesn’t really eliminate anything the federal government does. He’d still have the federal government taxing us to pay for Social Security, Medicare, Medicaid, farm subsidies, and troops in a hundred countries. (He does propose to privatize Fannie Mae and Freddie Mac, so that’s one actual reduction in the scope of the federal government.) As big-government conservative David Brooks writes, “it is a serious effort to create a sustainable welfare state.”
But some of us don’t want to live in a “sustainable welfare state.” We don’t just want to “bend the cost curve.” We want a free society, a society in which people are free to make their own decisions and bear the responsibility, a society in which each of us is the owner of his or her own life.…
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The IRS: Even Worse Than You Think
Since it is tax-filing season and we all want to honor our wonderful tax system, let’s go into the archives and show this video from last year about the onerous compliance costs of the internal revenue code.
Narrated by Hiwa Alaghebandian of the American Enterprise Institute, the mini-documentary explains how needless complexity creates an added burden — sort of like a hidden tax that we pay for the supposed privilege of paying taxes.
Two things from the video are worth highlighting.
First, we should make sure to put most of the blame on Congress. As Ms. Alaghebandian notes, the IRS is in the unenviable position of trying to enforce Byzantine tax laws. Yes, there are examples of grotesque IRS abuse, but even the most angelic group of bureaucrats would have a hard time overseeing 70,000-plus pages of laws and regulations (by contrast, the Hong Kong flat tax, which has been in place for more than 60 years, requires less than 200 pages).
Second, we should remember that compliance costs are just the tip of the iceberg. The video also briefly mentions three other costs.
- The money we send to Washington, which is a direct cost to our pocketbooks and also an indirect cost since the money often is used to finance counterproductive programs that further damage the economy.
- The budgetary burden of the IRS, which is a staggering $12.5 billion. This is the money we spend to employ an army of tax bureaucrats that is larger than the CIA and FBI combined.
- The economic burden of the tax system, which measures the lost economic output from a tax system that penalizes productive behavior.
The way to fix this mess, needless to say, is to junk the entire tax code and start all over.
I’ve been a big proponent of the flat tax, which would mean one low tax rate, no double taxation of savings, and no corrupt loopholes. But I’m also a big fan of national sales tax proposals such as the Fair Tax, assuming we can amend the Constitution so that greedy politicians don’t pull a bait and switch and impose both an income tax and a sales tax.
But the most important thing we need to understand is that bloated government is our main problem. If we had a limited federal government, as our Founding Fathers envisioned, it would be almost impossible to have a bad tax system. But if we continue to move in the direction of becoming a European-style welfare state, it will be impossible to have a good tax system.
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Jon Stewart: ‘Tax Expenditures’ = Newspeak
Along with other advocates of limited government, I have criticized the convention of referring to targeted tax breaks as “tax expenditures” or “tax subsidies.” Yes, targeted tax breaks share many characteristics with government spending. But they are not government spending. And if we concede that premise, then someday, some smarmy politician will try to increase taxes while telling us it’s a spending cut.
That someday has come. And in the below video, Jon Stewart is all over it. (Skip ahead to about 5:00.) Stewart’s comments are worth transcribing:
What? “Spending reductions in the tax code”? The tax code isn’t where we spend, it’s where we collect. And tha–ohhhhh. I guess what you said is tax code — code for raising taxes. You managed to talk about a tax hike as a spending reduction. [Laughter.] Can we afford that and the royalty checks you’re going to have to send to George Orwell? That is the weirdest way — just say tax hike.
There ain’t no such thing as a tax expenditure. There ain’t no such thing as a tax subsidy.
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Death by Decorator
The Wall Street Journal reports on a heated battle in Florida over whether to deregulate commercial interior designers — that is, to allow just anyone to hang out a shingle and seek customers looking for office design. It turns out the question is fraught with more danger than one might have realized. Herewith, the opening of the Journal’s comprehensive report:
MIAMI—Interior designers may seem to inhabit a genial world of pastel palettes and floral motifs. But right now in this state, their industry is locked in an indecorous pillow fight over who has the right to design.
Florida is one of only three states that require commercial interior designers to become licensed before they hang a single painting in an office building, school or restaurant. A bill making its way through the state legislature, however, would deregulate the occupation, along with more than a dozen others, including yacht brokers and hair braiders.
That possibility has the state’s licensed interior designers ruffled. They’ve hired Ron Book, one of the state’s most influential lobbyists, to fight the bill. And they’ve stormed legislative hearings to warn of the mayhem that would ensue if the measure passes.
Among the scenarios they’ve conjured: flammable carpets sparking infernos; porous countertops spreading bacteria; jail furnishings being turned into weapons.
The thought of “someone in my position that thinks they know what they’re doing because they watched HGTV for two weeks scares me,” licensed interior designer Terra Sherlock said at a hearing in March.
Another licensed designer, Michelle Earley, argued that use of the wrong fabrics in hospitals could spread infection. By deregulating, she told lawmakers, “what you’re basically doing is contributing to 88,000 deaths every year,” citing a study by the Centers for Disease Control and Prevention on deaths from hospital-acquired infections.
Though the CDC study doesn’t mention interior design as a cause of infections, Ms. Earley says that bacteria can spread if moisture-resistant fabrics aren’t used on things like chairs and mattresses. That, in turn, can lead to urinary tract infections, staph and other life-threatening conditions, she says.
Interior design “sounds like this simple hanging curtains on a wall,” said Ms. Earley in an interview. But “it only takes a couple things to go wrong for people to lose their lives.”
Scary.
For a more skeptical look at the need to protect the public from unlicensed hair braiders, ballroom-dance-studio owners, and interior designers, see this column by Cato chairman and Floridian Bob Levy. In February the Wall Street Journal reported that occupational licensing is actually spreading, despite decades of criticism from economists.
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TSA: If You Object to Giving Up Your Rights, We Should Take a Closer Look at You
TSA screeners and behavior detection officers may give you extra attention if you complain about security protocols (video at the jump). Former FBI agent Michael German sums up my feelings pretty well:
It’s circular reasoning where, you know, I’m going to ask someone to surrender their rights; if they refuse, that’s evidence that I need to take their rights away from them. And it’s simply inappropriate.
In related news, the GAO recently told Congress that the TSA’s Screening Passengers by Observation Technique (SPOT) is not scientifically grounded. The GAO testimony is available here.
This Week in Government Failure
Over at Downsizing the Federal Government, we focused on the following issues this week:
- If there’s this much resistance to a budget haircut, how can we hope to agree on surgery that would actually reduce spending, balance the budget, and avert national bankruptcy?
- Policymakers looking for spending cuts are finally turning an eye toward farm subsidies.
- Despite the budget cuts agreed to this week, total federal outlays will still rise by approximately $177 billion.
- President Obama wants to get reelected, and he will need a strong economy to succeed. Penalizing millionaires won’t help, but partnering with Republicans on corporate tax reforms and spending cuts would boost the economy and his job prospects.
- Spending increased an average $170 billion a year over the last decade. Thus, the $40 billion cut reverses out no more than one-quarter of one year’s worth of the last decade of increases.
- A new Cato video does an excellent job of visualizing the minuscule spending cuts Republicans and Democrats agreed to this week.
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