The Objectivist
Democrats Gone Wild: Obama and the Democrats Have a Spending Orgy
Dunkirk-Fredonia Observer
March 2, 2009
Critics of President Obama and the Democrats in Congress made three predictions: they would push government spending through the roof, jack up taxes, and damage the economy in the process. The critics were right about the first and the second is clearly in the works. The jury is still out on the third, although things do not look good.
President Obama and the Congress are engaged in a spending orgy. On the heels of its $787B stimulus bill (actually around $1.2 trillion once interest costs are added), the House passed a $410B omnibus spending bill that covered 9 of the 12 federal categories. When the two are combined, the spending increases per department are astounding. According to the Wall Street Journal, here are a few of the increases when compared to 2008. The first number is the additional dollars and the second the percentage increase: Energy & Water ($46.7 billion, 151%), Transportation/Housing and Urban Development ($68 billion, 139%), Labor/Health and Human Services ($131.8 billion, 91%), Interior ($11.9 billion, 45%), and Agriculture ($8 billion, 45%). The percentage of federal spending as a share of the GDP is heading up to 28% from 21% at the end of the Bush administration.
Obama and company are gearing up to spend a lot more. The spending plan authorizes but does not yet spend $634 billion over the next ten years to extend health coverage to the 46 million who are uninsured and to subsidize the premiums of others who already have insurance. This figure probably underestimates how much this will cost. USA Today points out that one firm estimated that Obama’s plan would cost around $1 trillion. It also authorizes but does not spend another $750 billion for further bailouts. Clearly, this is just the beginning. Even on defense, where one would expect the Democrats to cut, they propose to increase spending by 4%.
This spending is the height of irresponsibility. The deficit in 2009 will be 12.3% of the Gross Domestic Product ($1.8 trillion), nearly four times larger than in the last year of the spendthrift Bush administration (3.2% of GDP and $460 billion). Nor is this a one-time shot. The Obama administration predicts that in 2010 the deficit will be $1.2 trillion (8% of the GDP). Given that this is based on economic models that are more optimistic than those of private economists, the 2010 figure likely underestimates it. The added spending will become the baseline for spending in years to come, thereby ensuring that the government will siphon out more and more of our wealth.
As one would expect of the professional politicians, the budget includes massive pork-barrel spending. The taxpayer watchdog group, Taxpayers for Common Sense, asserts that the omnibus bill includes around 8,600 earmarks costing $7.7 billion. When he signs this, President Obama will break yet another campaign promise, this time his promise not to sign bills loaded up with earmarks.
Obama and his merry band of spenders plan to pay in part for the spending by soaking the rich. Obama’s proposal slams the top 5% of taxpayers, specifically individuals making more than $200,000 and couples making more than $250,000. Their tax rates will rise roughly from 35% to 39.6% (a 13% increase). They would also be assaulted with limits on itemized deductions and a massive rise in capital gains and dividend taxes. The Wall Street Journal estimates that the increase will raise their effective rate to 42% (a 20% increase). Nor will this soak-the-rich approach stop the bleeding. The Journal points out that using 2006 figures, even if the government confiscated 100% of all income above $500,000 this would only yield $1.3 trillion. This figure ignores the recent loss in stock-market wealth and in any case barely covers the 2010 deficit.
As a side note, the golden-goose rich already pay far more than their share. Using 2006 IRS data, the most recent available, the richest 1% made 22% of U.S. income and paid 39.9% of income-tax revenue. The top 5% paid 60% of personal income tax and the top 10% paid 71%. I defy anyone to explain why this is just or fair.
Before you smile at the thought of the rich being squeezed, note that you too are on the menu. According to the Tax Foundation, reverting back to the higher Clinton-era rates on the two highest-income-tax brackets will hit 45-55% of small businesses. Obama also plans higher fees for companies drilling on federal land and $600 billion in carbon taxes. These taxes will be passed on to consumers, thereby acting as a silent tax. They’ll swamp the tax rebate ($400 for an individual, $800 for a couple). Worse yet, because the rebate is not accompanied by a decrease in income-tax rates, the rebates will be taxed as income. That is, the government will claw back part of checks. In addition, the looming problems with Social Security and Medicare will exacerbate all of the debt- and tax-related problems.
It is not yet clear how the economy will respond to massive growth in debt-fueled government spending. The initial response is not good. The stock market (S&P 500) has dropped over 30% since the day that Obama was elected. To the extent that this reflects disinvestment in American corporations, trouble is on the horizon.
President Obama is well on his way to producing a seismic shift in the United States. Specifically, his attempt to vastly expand government, run up the debt to do so, and jack up taxes to pay for some of the expansion is indeed real change. Whether this will harm the economy has yet to be seen, but the initial indication is scary.
04 March 2009
19 February 2009
The Suleman Octuplets
The Objectivist
Unfair Criticism of Nadya Suleman and her Octuplets
Dunkirk-Fredonia Observer
February 16, 2009
On January 26, 2009, 33-year-old Nadya Suleman gave birth to octuplets. She already had six children and so the eight gave her fourteen. There was widespread criticism of her decision and her physician’s (Michael Kamrava’s) decision to help her by the use of in vitro fertilization (IVF). There were six embryos implanted in her and two embryos split, thereby producing eight fetuses. After one month, five fetuses were evident. She was given the option to abort some and decided against it. Medical guidelines recommend the implantation of two for people who fit her profile. Suleman justified the multiple implantations on the basis that it prevented the frozen embryos from being destroyed.
Suleman is divorced and does not currently have a job. She injured her back at work and between 2002 and 2008 received $167,908 in disability payments. She currently lives with her parents and children. Her maternal grandmother claims that she has contributed nothing toward housing or food costs. Her parents filed for bankruptcy in 2008. They abandoned a house in 2007 and admit to having nearly $1 million dollars in liabilities.
The government gives her $490 a month in food stamps along with disability payments for three of her initial six children. One of her sons is autistic, a second suffers from attention deficit hyperactivity disorder, and a third has delayed speech and some autistic symptoms. The Associated Press reports that in California, a low-income family can receive Social Security payments of up to $793 a month for each disabled child. Three children would amount to $2,379. When the food stamps and disability payments are combined, she still receives up to $34,428 a year. It’s worth noting that this is less than parents in New York receive if they have two or more children in New York’s public schools.
The Associated Press also reports that the octuplets' medical costs have not been disclosed, but according to the U.S. Department of Health and Human Services, in 2006 in California, the average cost for a premature baby's hospital stay in California was $164,273. Eight times that is $1.3 million. According to the U.S. Department of Agriculture, the cost of raising 14 children through age 17 ranges from $1.3 million to $2.7 million.
The criticism of Suleman has been intense, but hard to follow. One criticism is that the desire to have such a large family reflects mental illness. I see little evidence for such a claim and in any case it isn’t a reason to be angry with her. If this criticism were correct, then other large families would be subject to such criticisms and no one seems to want to make this claim.
A second criticism is that she acted wrongly toward the octuplets. However, if she had not implanted them, they would have died. Assuming that their lives are worth living, she benefitted them. Even if one thinks that embryos are not individuals with interests, it is hard see how they would have been better off not existing.
A third criticism is that she acted wrongly toward her first six children. Perhaps, but I’m not sure that a parent has a duty to have more children only if it will benefit the previous ones. This is particularly true if one adopts a pro-life position (for example, an embryo has the same status as a seven-year-old child) and the way to benefit previous children is to allow other ones to die, albeit in embryonic form.
The real criticism seems to be that she harmed the taxpayers, by forcing them to pay for her children. If we add up the cost of the premature babies’ stay ($1.3 million) and the cost to raise them ($2.7 million), we end up with a total of $4 million. This criticism is hard to follow. Pork-barrel Congressmen like the recently indicted Ted Stevens (R-AK), former Klansman Robert Byrd (D-WV), and tax cheat Charles Rangel (D-NY) waste this in five minutes of committee work and we don’t see the same outpouring of hatred toward them. In addition, the average low-skill household sucks hard at the government teat. According to the Heritage Foundation, over the life of the household the poor take $1.3 million more in benefits than they pay out. Nary a word. On one estimate by philosopher Michael Levin, as a group, black households receive $75 billion more in welfare benefits than they pay in (using figures from the 1990’s). Again, silence. In New York, parents who have three special-education children can expect to receive more than $60,000 a year in education benefits from the taxpayer, not counting the bag of goodies that all parents get ($1,000 per child child-tax credit, child-care deductions, etc.) receive. More silence. But Suleman has a lot of children and out come the long knives.
Even if it was wrong to waste taxpayer money, it depends on what you get for it and it would be an interesting argument to hear Suleman’s critics explain whether they think the education and well-being of 14 children has less worth than $4 million dollars. Using President Obama’s arguments for the bank bailout, car company bailout, and stimulus package ($1.5 trillion), we could view this as part of the stimulus.
There has also been widespread criticism of the physician. Recently, the Medical Board of California announced that it was going to investigate the physician on the question of whether his treatment of Suleman violated its standard of care. The Los Angeles Times reports that this doctor is also involved in another controversy. He is alleged to have given fertility treatment to a 49-year-old woman who is uninsured, five months pregnant with quadruplets, and hospitalized. Apparently, at least seven embryos were used when the woman only wanted was one child. One can understand the criticism if he endangered Suleman’s life or those of the embryos. However, this does little to explain the massive venom directed at Suleman. In addition, if the physician made Suleman aware of these risks and she still wanted to continue, the criticism of him fades because she assumed the risk. Again, the real criticism seems directed at the cost.
This case brings up an interesting proposal that has been bouncing around academic circles for a few decades. In different proposals, philosopher Hugh LaFollette, psychiatry professor John Westman, and psychology professor David Lykken have proposed requiring parental licensing. Consider LaFollette’s argument. He points out that some parents neglect their children, physically abuse them, or kill them. In addition, children born to incompetent parents impose costs on society via their offspring’s criminality, welfare usage, out-of-wedlock births, etc. LaFollette proposes that couples should be required to obtain a license indicating that they are competent in child rearing before they are permitted to have children. In defense of his claim, LaFollette points out that we often require that people get licenses to be a physician, lawyer, or pharmacist. We don’t even let people drive without one. He notes that the state evaluates parents who want to adopt and is therefore already in the business of screening out those who are unfit to be parents. LaFollette argues that unlicensed parents might have their newborns taken away and given up for adoption or to a foster home. It is an interesting question whether Suleman would have received her license. My guess is that she would.
Many of us hate the spendthrift government officials that dole out our money like manna from heaven. However, the hatred and venom directed at Suleman is harder to understand. She didn’t make the rules or victimize anyone. She just wanted to have a large family.
Unfair Criticism of Nadya Suleman and her Octuplets
Dunkirk-Fredonia Observer
February 16, 2009
On January 26, 2009, 33-year-old Nadya Suleman gave birth to octuplets. She already had six children and so the eight gave her fourteen. There was widespread criticism of her decision and her physician’s (Michael Kamrava’s) decision to help her by the use of in vitro fertilization (IVF). There were six embryos implanted in her and two embryos split, thereby producing eight fetuses. After one month, five fetuses were evident. She was given the option to abort some and decided against it. Medical guidelines recommend the implantation of two for people who fit her profile. Suleman justified the multiple implantations on the basis that it prevented the frozen embryos from being destroyed.
Suleman is divorced and does not currently have a job. She injured her back at work and between 2002 and 2008 received $167,908 in disability payments. She currently lives with her parents and children. Her maternal grandmother claims that she has contributed nothing toward housing or food costs. Her parents filed for bankruptcy in 2008. They abandoned a house in 2007 and admit to having nearly $1 million dollars in liabilities.
The government gives her $490 a month in food stamps along with disability payments for three of her initial six children. One of her sons is autistic, a second suffers from attention deficit hyperactivity disorder, and a third has delayed speech and some autistic symptoms. The Associated Press reports that in California, a low-income family can receive Social Security payments of up to $793 a month for each disabled child. Three children would amount to $2,379. When the food stamps and disability payments are combined, she still receives up to $34,428 a year. It’s worth noting that this is less than parents in New York receive if they have two or more children in New York’s public schools.
The Associated Press also reports that the octuplets' medical costs have not been disclosed, but according to the U.S. Department of Health and Human Services, in 2006 in California, the average cost for a premature baby's hospital stay in California was $164,273. Eight times that is $1.3 million. According to the U.S. Department of Agriculture, the cost of raising 14 children through age 17 ranges from $1.3 million to $2.7 million.
The criticism of Suleman has been intense, but hard to follow. One criticism is that the desire to have such a large family reflects mental illness. I see little evidence for such a claim and in any case it isn’t a reason to be angry with her. If this criticism were correct, then other large families would be subject to such criticisms and no one seems to want to make this claim.
A second criticism is that she acted wrongly toward the octuplets. However, if she had not implanted them, they would have died. Assuming that their lives are worth living, she benefitted them. Even if one thinks that embryos are not individuals with interests, it is hard see how they would have been better off not existing.
A third criticism is that she acted wrongly toward her first six children. Perhaps, but I’m not sure that a parent has a duty to have more children only if it will benefit the previous ones. This is particularly true if one adopts a pro-life position (for example, an embryo has the same status as a seven-year-old child) and the way to benefit previous children is to allow other ones to die, albeit in embryonic form.
The real criticism seems to be that she harmed the taxpayers, by forcing them to pay for her children. If we add up the cost of the premature babies’ stay ($1.3 million) and the cost to raise them ($2.7 million), we end up with a total of $4 million. This criticism is hard to follow. Pork-barrel Congressmen like the recently indicted Ted Stevens (R-AK), former Klansman Robert Byrd (D-WV), and tax cheat Charles Rangel (D-NY) waste this in five minutes of committee work and we don’t see the same outpouring of hatred toward them. In addition, the average low-skill household sucks hard at the government teat. According to the Heritage Foundation, over the life of the household the poor take $1.3 million more in benefits than they pay out. Nary a word. On one estimate by philosopher Michael Levin, as a group, black households receive $75 billion more in welfare benefits than they pay in (using figures from the 1990’s). Again, silence. In New York, parents who have three special-education children can expect to receive more than $60,000 a year in education benefits from the taxpayer, not counting the bag of goodies that all parents get ($1,000 per child child-tax credit, child-care deductions, etc.) receive. More silence. But Suleman has a lot of children and out come the long knives.
Even if it was wrong to waste taxpayer money, it depends on what you get for it and it would be an interesting argument to hear Suleman’s critics explain whether they think the education and well-being of 14 children has less worth than $4 million dollars. Using President Obama’s arguments for the bank bailout, car company bailout, and stimulus package ($1.5 trillion), we could view this as part of the stimulus.
There has also been widespread criticism of the physician. Recently, the Medical Board of California announced that it was going to investigate the physician on the question of whether his treatment of Suleman violated its standard of care. The Los Angeles Times reports that this doctor is also involved in another controversy. He is alleged to have given fertility treatment to a 49-year-old woman who is uninsured, five months pregnant with quadruplets, and hospitalized. Apparently, at least seven embryos were used when the woman only wanted was one child. One can understand the criticism if he endangered Suleman’s life or those of the embryos. However, this does little to explain the massive venom directed at Suleman. In addition, if the physician made Suleman aware of these risks and she still wanted to continue, the criticism of him fades because she assumed the risk. Again, the real criticism seems directed at the cost.
This case brings up an interesting proposal that has been bouncing around academic circles for a few decades. In different proposals, philosopher Hugh LaFollette, psychiatry professor John Westman, and psychology professor David Lykken have proposed requiring parental licensing. Consider LaFollette’s argument. He points out that some parents neglect their children, physically abuse them, or kill them. In addition, children born to incompetent parents impose costs on society via their offspring’s criminality, welfare usage, out-of-wedlock births, etc. LaFollette proposes that couples should be required to obtain a license indicating that they are competent in child rearing before they are permitted to have children. In defense of his claim, LaFollette points out that we often require that people get licenses to be a physician, lawyer, or pharmacist. We don’t even let people drive without one. He notes that the state evaluates parents who want to adopt and is therefore already in the business of screening out those who are unfit to be parents. LaFollette argues that unlicensed parents might have their newborns taken away and given up for adoption or to a foster home. It is an interesting question whether Suleman would have received her license. My guess is that she would.
Many of us hate the spendthrift government officials that dole out our money like manna from heaven. However, the hatred and venom directed at Suleman is harder to understand. She didn’t make the rules or victimize anyone. She just wanted to have a large family.
04 February 2009
Bailout #2: The Stimulus Package and Incentives
The Objectivist
Stimulus Package: Adding Fuel to the Irresponsibility-Fire
Dunkirk-Fredonia Observer
February 2, 2009
There is no evidence that the House stimulus bill will work. Even if it did work in the short term, it will have horrendous long-term effects because it transfers assets from the private to the public sector and because it ratchets up the national debt. However, I’d like to focus on another problem. The bill promotes the worst habits of state and local government.
The House passed a bill providing for $819 billion to stimulate the economy. This actually amounts to $1.17 trillion once the $347 billion in interest costs are taken into consideration. The arrogant Senate is currently considering an even more generous bill worth $888 billion, not counting interest. This is in addition to the $700 billion that has already been authorized to bail out the banks. A billion here and a billion there and soon we are talking real money.
My favorite bartender, quoting comedian John Stewart, pointed out that when one adds the Senate’s stimulus bill to the bank-bailout bill, the total is $1.59 trillion. If we divide this amount by the number of adults (230 million), the government could have given each individual $6,900 per adult ($13,800 per couple). In the short term, this is as likely as the stimulus plan to bring the foreclosure crisis to a screeching halt and eliminate the troubled asset problem that endangers many banks. Ask yourself whether you would prefer to receive a check for $13,800 or have Senators Schumer, Kennedy, and Dodd shovel out the money to their campaign donors and other favored groups.
The stimulus package contains $200 billion for the states. One of the main problems with it is the perverse incentives this will provide. As the Wall Street Journal pointed out, state spending has exploded in the last five years. State spending has increased roughly 7% per year from 2003-2007. That is, it increased at 34% compared to 19% inflation during that period. The states also went heavily into debt. Their debt load doubled to $2.23 trillion in 2008 from $1.14 trillion a decade earlier. The $2.23 trillion does not even include the nearly $1.5 trillion in unfunded health and pension liabilities they’ve allowed to pile up. The last thing such profligate spenders need is to have their drunken spending sprees covered by taxpayers from responsible states. Yet this is precisely what the bill does.
As usual, New York is especially worthy of contempt. It faces an estimated $12 billion deficit. But, as the Wall Street Journal points out, New York's government spent more than $1,000 a year more per family than in the average state. New York would have a $5 billion surplus if it had limited its spending to the average for the 50 states. New York has the second highest taxes in the country, having only recently, and probably temporarily, been passed by New Jersey. The legislature still hasn’t passed the budget for this year and its process by which it does so is largely closed to public scrutiny.
As if the effects on the states weren’t bad enough, the effects on education spending are just as bad. The bill contains $159 billion in additional education spending. The stimulus bill grants $39 billion for school districts and public colleges and another $25 billion for high-priority state needs, which may include education. Outside of New York City, New York education costs constitute 62% of the property taxes. When you control for home value, New York has 9 of the 10 highest taxed counties in the country. The driving force is spending. In 2008-2009, New York spent $18,768 per pupil. This is more than any other state and involves a 7.9% annual rate of increase from 2000 to 2006. Why would anyone think it is wise to subsidize school boards that spent their way into oblivion? Worse, why should a country already up to its neck in debt further mortgage its future to bail out these big spenders?
The same concern applies to higher education spending. From 1982 to 2007, college tuition and fees rose 439%. Compare this to medical-care costs which rose 251% over that period and inflation (consumer price index) which rose 106%. Colleges and universities have devolved away from a focus on education and now contain politically correct multicultural affairs, affirmative action, and equal opportunity offices as well as a host of bureaucracies only distantly related to education. These include counseling centers, overstaffed police forces, sports teams, and armies of staff and administrators. So what does the stimulus bill do in response to this out-of-control spending? It pours gasoline onto the fire by providing tens of billions of dollars for more spending. This includes $10.3 billion more to provide a $2,500 tax credit for college and money for more grants, loans, etc. Apparently, Congress wants to keep on ratcheting up the subsidies for higher education and will later feign surprise when the exploding costs that the subsidies make possible end up making college increasingly unaffordable for anyone not rich or bathed in financial aid.
Incentives also apply when we increase welfare and exempt some people from paying their fair share. Already roughly 33% of taxpayers pay no income taxes. By expanding the earned-income tax credit (a credit that gives poor and working class people back the money they paid in via payroll taxes), the stimulus package furthers the notion that some people don’t have to pay for the government. The House also included $72 billion to extend jobless benefits and increase aid to the poor, including food stamps. There is an old slogan that if you tax something you’ll get less of it and if you subsidize it, you’ll get more of it. We are now increasing the subsidies for being poor and behaviors that cause it (for example, dropping out of school, not working, and having children out of wedlock). We can expect that these subsidies will get us more of these behaviors.
While Obama and his band of merry thieves spend the country into oblivion, Social Security and Medicare loom on the horizon. Social Security will start running in the red by 2017 and entitlement reform is still being ignored. The national debt keeps on climbing and the high tax rates make our country less competitive with each additional year. For example, estate and corporate taxes are very high by international standards.
Providing subsidies to states and school boards that have repeatedly shown themselves to be big spenders will only encourage more of the same. The stimulus bill’s effect on incentives will hurt us in the long run.
Stimulus Package: Adding Fuel to the Irresponsibility-Fire
Dunkirk-Fredonia Observer
February 2, 2009
There is no evidence that the House stimulus bill will work. Even if it did work in the short term, it will have horrendous long-term effects because it transfers assets from the private to the public sector and because it ratchets up the national debt. However, I’d like to focus on another problem. The bill promotes the worst habits of state and local government.
The House passed a bill providing for $819 billion to stimulate the economy. This actually amounts to $1.17 trillion once the $347 billion in interest costs are taken into consideration. The arrogant Senate is currently considering an even more generous bill worth $888 billion, not counting interest. This is in addition to the $700 billion that has already been authorized to bail out the banks. A billion here and a billion there and soon we are talking real money.
My favorite bartender, quoting comedian John Stewart, pointed out that when one adds the Senate’s stimulus bill to the bank-bailout bill, the total is $1.59 trillion. If we divide this amount by the number of adults (230 million), the government could have given each individual $6,900 per adult ($13,800 per couple). In the short term, this is as likely as the stimulus plan to bring the foreclosure crisis to a screeching halt and eliminate the troubled asset problem that endangers many banks. Ask yourself whether you would prefer to receive a check for $13,800 or have Senators Schumer, Kennedy, and Dodd shovel out the money to their campaign donors and other favored groups.
The stimulus package contains $200 billion for the states. One of the main problems with it is the perverse incentives this will provide. As the Wall Street Journal pointed out, state spending has exploded in the last five years. State spending has increased roughly 7% per year from 2003-2007. That is, it increased at 34% compared to 19% inflation during that period. The states also went heavily into debt. Their debt load doubled to $2.23 trillion in 2008 from $1.14 trillion a decade earlier. The $2.23 trillion does not even include the nearly $1.5 trillion in unfunded health and pension liabilities they’ve allowed to pile up. The last thing such profligate spenders need is to have their drunken spending sprees covered by taxpayers from responsible states. Yet this is precisely what the bill does.
As usual, New York is especially worthy of contempt. It faces an estimated $12 billion deficit. But, as the Wall Street Journal points out, New York's government spent more than $1,000 a year more per family than in the average state. New York would have a $5 billion surplus if it had limited its spending to the average for the 50 states. New York has the second highest taxes in the country, having only recently, and probably temporarily, been passed by New Jersey. The legislature still hasn’t passed the budget for this year and its process by which it does so is largely closed to public scrutiny.
As if the effects on the states weren’t bad enough, the effects on education spending are just as bad. The bill contains $159 billion in additional education spending. The stimulus bill grants $39 billion for school districts and public colleges and another $25 billion for high-priority state needs, which may include education. Outside of New York City, New York education costs constitute 62% of the property taxes. When you control for home value, New York has 9 of the 10 highest taxed counties in the country. The driving force is spending. In 2008-2009, New York spent $18,768 per pupil. This is more than any other state and involves a 7.9% annual rate of increase from 2000 to 2006. Why would anyone think it is wise to subsidize school boards that spent their way into oblivion? Worse, why should a country already up to its neck in debt further mortgage its future to bail out these big spenders?
The same concern applies to higher education spending. From 1982 to 2007, college tuition and fees rose 439%. Compare this to medical-care costs which rose 251% over that period and inflation (consumer price index) which rose 106%. Colleges and universities have devolved away from a focus on education and now contain politically correct multicultural affairs, affirmative action, and equal opportunity offices as well as a host of bureaucracies only distantly related to education. These include counseling centers, overstaffed police forces, sports teams, and armies of staff and administrators. So what does the stimulus bill do in response to this out-of-control spending? It pours gasoline onto the fire by providing tens of billions of dollars for more spending. This includes $10.3 billion more to provide a $2,500 tax credit for college and money for more grants, loans, etc. Apparently, Congress wants to keep on ratcheting up the subsidies for higher education and will later feign surprise when the exploding costs that the subsidies make possible end up making college increasingly unaffordable for anyone not rich or bathed in financial aid.
Incentives also apply when we increase welfare and exempt some people from paying their fair share. Already roughly 33% of taxpayers pay no income taxes. By expanding the earned-income tax credit (a credit that gives poor and working class people back the money they paid in via payroll taxes), the stimulus package furthers the notion that some people don’t have to pay for the government. The House also included $72 billion to extend jobless benefits and increase aid to the poor, including food stamps. There is an old slogan that if you tax something you’ll get less of it and if you subsidize it, you’ll get more of it. We are now increasing the subsidies for being poor and behaviors that cause it (for example, dropping out of school, not working, and having children out of wedlock). We can expect that these subsidies will get us more of these behaviors.
While Obama and his band of merry thieves spend the country into oblivion, Social Security and Medicare loom on the horizon. Social Security will start running in the red by 2017 and entitlement reform is still being ignored. The national debt keeps on climbing and the high tax rates make our country less competitive with each additional year. For example, estate and corporate taxes are very high by international standards.
Providing subsidies to states and school boards that have repeatedly shown themselves to be big spenders will only encourage more of the same. The stimulus bill’s effect on incentives will hurt us in the long run.
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