Fiscal Insanity

The Daily Wire posted an article today about the latest proposal by Representative Alexandria Ocasio-Cortez.

The article reports:

The 29-year-old former bartender has unveiled a new six-bill package of legislation titled “A Just Society.”

“A just society provides a living wage, safe working conditions, and healthcare. A just society acknowledges the value of immigrants to our communities. A just society guarantees safe, comfortable, and affordable housing,” says a page on her House website dedicated to the package. “By strengthening our social and economic foundations, we are preparing ourselves to embark on the journey to save our planet by rebuilding our economy and cultivate a just society.”

The package has six parts:

  • “The Place to Prosper Act” would prevent year-over-year rent increases of more than 3%.
  • “The Uplift Workers Act” would mandate that the Department of Labor to create a “worker-friendly score” considering factors such as paid-family leave, a $15 minimum wage and union membership.
  • “The Mercy in Re-entry Act” would grant public benefits to those convicted of criminal offenses.
  • The “Guarantees the Economic, Social and Cultural Rights for All” Act does, well, just that.
  • “The Recognizing Poverty Act” orders the Department of Health and Human Services “to adjust the federal poverty line” based on location.
  • “The Embrace Act” would allow illegal aliens to claim the same welfare benefits as all U.S. citizens and legal immigrants.

How about a “just society” where everyone gets to keep what they earn, and those who feel the need to help others are free to do that.

A New York Times article from November 3, 2018, reported the following:

Charitable contributions may be lower in Democratic-leaning counties, but residents support the social safety net through higher taxes.

Note to those who support government programs over private charity–in general private charities are run much more efficiently than government programs. Private charities also have a handle on who genuinely needs help and who has learned how to game the system.

Generally speaking it is never a good idea to take money from people that earn it and give it to people who did not–at best it is de-motivational, at worst it is simple theft.

My Favorite Democrat Got It Right Again

My favorite Democrat has always been former Senator Daniel Patrick Moynihan of New York. He understood human nature and how government policies would actually hurt the people they claimed to help. He understood that the War on Poverty would destroy the African-American family structure (and eventually the white family structure) and he also understood the long-term impact of the Higher Education Act passed in 1965.

Today The Federalist posted an article about higher education in America that deals with some of the issues behind the indoctrination that is currently happening on our college campuses.

The article reports:

Far too many pundits believe culture is upstream from politics. That might be true, but bad policy is often upstream of culture. And it is shocking how often Republicans use the “culture” trope as an excuse for long-running inaction and lack of serious thought on needed policy changes.

One such example is higher education. Speakers such as Heather Mac Donald have done an excellent job of highlighting examples of the far-left bias that is prevalent at America’s higher ed institutions. Conservative YouTube channels are great at highlighting the perils of conservative speakers attempting to speak on various campuses.

But few address the elephant in the room. Taxpayers are heavily subsidizing the entrenched and blatant anti-American and anti-Christian bent in our colleges and universities.The huge budgets of these colleges — and their ability to pay professors well over six figures to teach for only several hours a week, only during the school year — is entirely the result of choices our elected officials have made.

…It started in 1965, when as part of Lyndon B. Johnson’s fateful Great Society, Congress passed the Higher Education Act. Among other things, the legislation introduced subsidized student loans to increase the number of Americans attending college, and it has been reauthorized multiple times since. Ever since, the terms of those loans have become more generous (the subsidization has increased).

The effects have been predictable, and many did predict them. For example, Democrat Sen. Daniel Patrick Moynihan, early in his career as a policy wonk, warned the system would lead to higher college costs.

Generally speaking, more money chasing after something raises its price. But the money chasing after higher ed is uniquely dulled of its price sensitivity. Borrowers are young and have little perspective about how much they are borrowing. These young, subsidized borrowers are also robbed of price signals, as everyone gets the same rate no matter what major he or she chooses.

The article points out that college costs have increased dramatically since 1965–the costs have increased much more quickly that the rate of inflation (four times faster than inflation since 1978).

The article continues:

Nevertheless, Congress certainly succeeded in its goal of more Americans attending college: Almost 70 percent of high school graduates now enroll in college, and the percentage of Americans aged 25 to 34 years old who have a secondary degree has moved from about 25 percent in 1990 to almost 50 percent today. But although college on average still provides a positive return on investment, that return has dropped significantly. Here’s The Economist, again:

By the universities’ own measures, this [binge of money and increase of administrators] has produced splendid results. Students are more than twice as likely to receive ‘A’ grades now than in 1960. When outsiders do the grading, however, they are less impressed: One study found that 36% of students ‘did not demonstrate any significant improvement in learning’ over four years of college.

For many Americans, the return on college is negative. Part of this is because many Americans going to college are ill-suited for it. For example, 40 percent of American students fail to get a four-year degree within six years of enrolling.

Please follow the link to read the entire article. It is fascinating. In the meantime, encourage you child to attend trade school instead of college. In the very near future, electricians, plumbers, and mechanics will have more job opportunities than engineers.

How Your Tax Money Is Spent

The Daily Signal posted the following today:

Obviously we have some work to do. The question that comes to mind is why do we always hear that Social Security is running out of money but we never hear that the Welfare State is running out of money. I think it is truly time to examine the bureaucracy that support each. I suspect we could save some serious money there without hurting the people who truly need government assistance.

Failing To Save Money

New Bern, North Carolina, is a beautiful city (rebuilding after Hurricane Florence). Obviously, rebuilding is costing a lot. The City Alderman are doing a good job of trying to repair the damage done by the hurricane, but it is costing a lot. In addition to the cost of the hurricane, New Bern is now faced with the cost of a U.S. House District 3 primary election, possible run-off election, and off-year election to replace Congressman Walter Jones. That has brought up the issue of the cost of elections–they are expensive.

In the March 21-27 issue of The County Compass (I could not find the letter on the website, I actually have the paper. This is a link to the website.), New Bern Alderman Jeff Odham explained a way that the City of New Bern could save money on elections and increase voter turnout in municipal elections. New Bern normally holds its municipal elections in October every four years (2013, 2017, 2021, etc.). Alderman Odham proposed holding municipal elections in March during federal election primary elections. This change would decrease the cost of municipal elections from roughly $36,000 (if there is no runoff) or $55,000 (if there is a runoff) to less than $5,000. What a fantastic idea. If the elections are held during the primary, the runoff can be held during the general election in November, again at a cost of less than $5,000. This resolution would have to be approved by the Board of Aldermen and sent to Raleigh so that the legislature could modify the charter of the City of New Bern.

Last night the Board of Aldermen rejected the resolution. Among other things, the proposal would result in the current Board of Aldermen serving a three-year term instead of a four-year term. A number of the Aldermen objected to that. They were willing to cost the taxpayers thousands of dollars in order to serve for one more year. The Aldermen that voted against the proposal were Aldermen Best, Aster, Harris and Bengel.

Mayor Dana Outlaw, Alderman Kinsey and Alderman Odham voted for the proposal. It is unfortunate that the other Aldermen were not interested in a savings of at least $30,000 every four years. I will not be voting for my current Alderman (who voted against the resolution) in the next election.

Wise Words From An Economic Professor

Walter E. Williams is a professor of economics at George Mason University. I heard him speak many years ago when one of my daughters received a degree from Northern Virginia Community College. He is a brilliant man. On March 16th, Professor Williams posted an article at the Daily Wire. The article deals with the idea of redistributing wealth.

The article states:

In a free society, people earn income by serving their fellow man. Here’s an example: I mow your lawn, and you pay me $40. Then I go to my grocer and demand two six-packs of beer and 3 pounds of steak. In effect, the grocer says, “Williams, you are asking your fellow man to serve you by giving you beer and steak. What did you do to serve your fellow man?” My response is, “I mowed his lawn.” The grocer says, “Prove it.” That’s when I produce the $40. We can think of the, say, two $20 bills as certificates of performance — proof that I served my fellow man.

A system that requires that one serve his fellow man to have a claim on what he produces is far more moral than a system without such a requirement. For example, Congress can tell me, “Williams, you don’t have to get out in that hot sun to mow a lawn to have a claim on what your fellow man produces. Just vote for me, and through the tax code, I will take some of what your fellow man produces and give it to you.”

The last example shouldn’t even be legal.

The article also comments on the idea of ‘making enough money”:

Let’s look at a few multibillionaires to see whether they have served their fellow man well. Bill Gates, co-founder of Microsoft, with a net worth over $90 billion, is the second-richest person in the world. He didn’t acquire that wealth through violence. Millions of people around the world voluntarily plunked down money to buy Microsoft products. That explains the great wealth of people such as Gates. They discovered what their fellow man wanted and didn’t have, and they found out ways to effectively produce it. Their fellow man voluntarily gave them dollars. If Gates and others had followed President Obama’s advice that “at a certain point” they’d “made enough money” and shut down their companies when they had earned their first billion or two, mankind wouldn’t have most of the technological development we enjoy today.

The article concludes:

Take a look at the website Billionaire Mailing List’s list of current billionaires. On it, you will find people who have made great contributions to society. Way down on the list is Gordon Earle Moore — co-founder of Intel. He has a net worth of $6 billion. In 1968, Moore developed and marketed the integrated circuit, or microchip, which is responsible for thousands of today’s innovations, such as MRIs, advances in satellite technology and your desktop computer. Though Moore has benefited immensely from his development and marketing of the microchip, his benefit pales in comparison with how our nation and the world have benefited in terms of lives improved and saved by the host of technological innovations made possible by the microchip.

The only people who benefit from class warfare are politicians and the elite; they get our money and control our lives. Plus, we just might ask ourselves: Where is a society headed that holds its most productive members up to ridicule and scorn and makes mascots out of its least productive and most parasitic members?

If you want to be a millionaire, find a need and fill it. That is the proven method.

More Insanity From The Political Left

Yesterday The Wall Street Journal posted an article about a recent statement from New York City Mayor Bill de Blasio.

The Mayor stated, “Here’s the truth. Brothers and sisters, there’s plenty of money in the world. There’s plenty of money in this city. It’s just in the wrong hands.”

Wow. So it’s wrong for the money to be in the hands of the people who actually earned it?

The article notes:

• Perhaps he means David Koch, the retired businessman and libertarian who donated the entire $65 million cost for the new public plaza in front of the Metropolitan Museum of Art. The more than six million people who visit the museum each year can now stroll past trees and fountains on their way in and out of the Met, which by the way is also supported by private donors.

• Or perhaps the mayor is thinking of Ken Langone, the Home Depot founder, who has donated hundreds of millions of dollars to the New York University Medical Center that treats patients of all incomes and social strata. Mr. Langone’s most recent $100 million gift, made last year, will go to provide cost-free tuition for every NYU medical student. Wrong hands?

• Or maybe the mayor has in mind Richard Gilder, who made a fortune in finance and provided the first major grant for the Central Park Conservancy that has rescued the park from its sad mid-20th-century decline. Each year the conservancy, led by private donors, restores eroding corners of this grand public space with new trees, lawns, playgrounds and ballfields that are used by tens of thousands across the city regardless of income.

Mr. Gilder has also given generously to the American Museum of Natural History and the New-York Historical Society, two other favorites for visitors and students of all ways and means.

• Then again the mayor dislikes charter schools, so perhaps he means Stanley Druckenmiller, the legendary investor who has donated hundreds of millions of dollars for Geoffrey Canada’s successful charter-school network in the poorest neighborhoods of the city. These students would otherwise be stuck in failing schools run by Mr. de Blasio’s friends in the teachers union.

But thanks to donations from Mr. Druckenmiller, and hedge-fund operator Dan Loeb’s gifts to the Success Academy charter network, thousands of kids have a shot at a better life.

The article reminds us that because of capitalism and the fact that when men can keep the fruits of their labor, donations are made that educate children, improve neighborhoods, and provide playgrounds and recreation.

Let’s compare that record with what happens when government controls the money. The article concludes:

As for Mr. de Blasio’s right hands, there are those failing schools. And don’t forget the New York City Housing Authority, which last year had to sign a consent decree with the federal government for lying about its failure to provide safe and sanitary conditions.

“Somewhat reminiscent of the biblical plagues of Egypt, these conditions include toxic lead paint, asthma-inducing mold, lack of heat, frequent elevator outages, and vermin infestations,” federal Judge William Pauley III wrote last year, adding that the authority “whitewashed these deficiencies for years.”

Perhaps those are the hands Mr. de Blasio should do something about.

There Are Some Really Good People In The World

Yesterday The Blaze posted an article about three students in New York who purchased a couch from the Salvation Army for their apartment. The couch was not particularly attractive, but it fit the space in their apartment.

As they were trying out the couch, they found a plastic envelope of money under one arm. At that point they began searching the couch.

The article reports what happened next:

After twenty minutes, the trio had uncovered $40,000 in cash. On one of those envelopes contained a woman’s name.

“We had a lot of moral discussions about the money,” Russo told the Rebellion. “We all agreed that we had to bring the money back to whoever it belonged to… it’s their money– we didn’t earn it. However, there were a lot of gray areas we had to consider.”

After each of the students spoke with their parents, they decided to attempt to reach the woman named on the envelope. Werkhoven’s mom found her number in a phone book and the group gave her a call. She answered.

“Oh, I left a lot of money in that couch,” the unidentified woman said.

The story continues:

“When we handed the money back to the woman, she told us that she felt like her husband was present in the room with us,” Guasti told the Rebellion.

The woman told the Rebellion that her husband gave her money each week before he passed away and she had hidden it inside the couch. However, when she had an operation on her back and was away for several months, her daughter sold the couch and replaced it with a full-size bed, following a doctor’s advice.

There are a few lessons to be learned from this story. The first is don’t sell your mother’s couch without asking. The second is that there are honest people in the world.

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The Personal Impact Of The Budget Deal–One Person’s Story

Somehow because of the size of our government and the amount of money taken from taxpayers to run it, we sometimes forget what some of the spending represents. Every now and then it’s a good idea to look at a story that illustrates where the money goes and why. Here is a story that explains one aspect of government spending.

Stacy Huisman posted an article at Militaryspouse.com recently. The article explains how the recent budget deal will impact her husband’s retirement pay and her family. The money cut from his retirement pay was the money they had planned to use to pay for their children’s’ college education. Please follow the link above to read the entire article. It illustrates beautifully the price our military families pay when one of their family members serves in the military.

There are a few aspects to the cut to retirement pay. First of all, that retirement pay was promised to our military when they signed up–they earned it. It was assumed that the cost of living increases in that pay were included in that promise. There is also the aspect of the price military families pay for having a family member in the military for twenty or more years. One on my own granddaughters is in fifth grade. She started attending her third elementary school in six years in September. Another granddaughter is in third grade. She is attending her second elementary school in three years. That is a high price to pay. She is living near her grandparents (my husband and I) because we chose to move to be close to her family–not because her family had a choice as to where they would live.

The thing that really bothers me about the budget deal is that military retirement was cut, but civil service retirement was not cut. Public sector workers make more than private sector workers to begin with. The public sector workers are now required to contribute a small amount to their pensions–something private sector workers have been doing for years, but they are still better compensated than the private sector.

The chart below is taken from a 2010 post by the Congressional Budget Office. As you can see, unless you have an advanced degree, it pays to work for the government.

 

The budget did not need to be cut at the expense of our military–there was enough pork in the public sector to avoid breaking a promise to those military families who serve our country.

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One Reason Government Spending Is Out Of Control

On Saturday the Washington Post posted an article about some of the end-of-the-year spending done by government agencies. The spending is a result of one of the side effects of baseline budgeting, which is something our government needs to get rid of. Baseline budgeting is the concept that a department’s budget is based on how much money they spent in the previous year. If they spend 90 thousand dollars and their budget was 100 thousand dollars, the department budget will be 90 thousand dollars in the following year. If they don’t spend all of the money in their budget, their budget is cut. This creates a mad rush to spend their entire budget by September 30, the end of the fiscal year. If they spend the full amount and ask for a 10 percent increase and get a 5 percent increase, that is considered a 5 percent budget cut. That is how Congress can claim they are cutting the budget while the spending continues to increase. These two concepts explain some of the rather interesting end-of-the-year spending done in the past few weeks by the government. As you read this, remember that this is under sequestration when Democrats are complaining that there is no money.

The article posts some examples of spending in recent weeks:

On Monday, VA paid $27,000 for an order of photographs showing sunsets, mountain peaks and country roads. They would go into a new center serving homeless veterans in Los Angeles; a spokeswoman described the art as “motivational and calming, professionally designed to enhance clinical operations.”

On Tuesday, the USDA bought $127,000 worth of toner cartridges (“end of year,” the order explained). VA spent another $220,000 on artwork for its hospitals.

On Wednesday, the Coast Guard paid $178,000 for cubicle furniture, replacing high-walled cubes with low-walled ones to improve the air flow in a large office area.

“Other higher-priority projects were not able to be executed, so they moved [money] to this lower-priority project” before the year’s end, said Coast Guard spokesman Carlos Diaz. “The money was going to be spent anyway.”

On Thursday, VA was buying art again. It spent $216,000 on artwork for a facility in Florida. In all, preliminary data showed that the agency made at least 18 percent of all its art purchases for the year in this one week. One-sixth of the buying in one-52nd of the year.

This is not a reasonable system. There is a spreadsheet at adelphi.edu that shows the federal deficit over the years. When President Obama took office, the deficit was approximately 12 million dollars. The deficit is now approaching 17 million dollars. That’s a pretty hefty increase in five years. However, the really interesting part of the spreadsheet is the relationship between the deficit and which party controls the House of Representatives. Remember, the House controls the spending. Please follow the link to the spreadsheet and take a look at the history of the federal deficit.

At any rate–baseline budgeting needs to go.

 

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