Freedom Line Blog

Arthur Laffer brought us the famed Laffer Curve, which plotted how higher tax rates can paradoxically reduce incoming revenues by inhibiting economic growth.

In today’s Wall Street Journal, Laffer adds to his legacy by showing how state income taxes lead to lower economic growth, personal income and population growth.  The impetus for Laffer’s analysis is ballot Initiative 1098 in the state of Washington, which would impose a new 5% income tax on individuals earning over $200,000 or couples over $400,000 per year.  An additional 4% would be heaped upon individuals earning over $500,000 or couples earning over $1 million.  Laffer crunches the real-world economic numbers, which clearly demonstrate that this is a destructive idea.  He shows that the nine states without a personal income tax enjoy 26.5% higher economic growth, 13.1% higher personal income growth and 9.4% higher population growth than the nine staes with the highest personal income tax rates. The highest-tax states also suffer 22% lower tax revenue growth and underperform in standard of living.

As Laffer neatly summarizes, “Each and every state that introduced an income tax saw its share of total U.S. output decline.”  He can’t stop states from descending into economic self-destruction, but he provides a great service by providing this warning beacon.

Below is one of the latest cartoons from two-time Pulitzer Prize-winner Michael Ramirez.

View more of Michael Ramirez’s cartoons on CFIF’s website here.

How’s this for drive-by media bias?  Today’s Washington Post runs the deceptive headline “Report Gives Stimulus Package High Marks.” Hmmm.  That sounds like a counterintuitive “Man Bites Dog” story worth reading.  So who issued the report?  The Post’s first paragraph admits that it comes from White House itself.  Worse, it was overseen by that respected rock of good judgment and common sense, Vice President Joe Biden.

Even with that baked-in bias, the White House report doesn’t seem to focus on how the $814 billion “stimulus” supposedly succeeded.  Rather, it emphasizes how the effort has already distributed 70% of the allocated funds, and managed to avoid “the fraud charges that plague more routine government spending programs.”  That’s it?  That’s the best that even Joe Biden can claim?  That should actually come as discouraging news, not encouraging news, to “stimulus” proponents.  After all, if 70% of its funds have already been spent, but we still haven’t experienced its promised results, what remains other than $814 billion added to our nation’s debt?  The White House promised that unemployment would top out twelve months ago at 8% if the bill passed, but we remain stuck at 9.6%.  Instead of igniting our economic furnace, it has merely clouded growth and undermined the business and hiring climate.

The White House and its apologists speculatively claim that the “stimulus” averted another great depression, but today’s Wall Street Journal carries an analysis by former Senator Phil Gramm devastating that assertion.  Gramm compares U.S. growth and employment figures to other developed countries that didn’t engage in the irresponsible “stimulus” profligacy we did, and shows that we lag far behind.  As the Post story notes, Obama’s “stimulus” was “the largest effort in U.S. history to counteract the effects of a recession.”  All it has done is prove once again that government doesn’t create jobs or growth, but economic uncertainty and debt.

Below is one of the latest cartoons from two-time Pulitzer Prize-winner Michael Ramirez.

View more of Michael Ramirez’s cartoons on CFIF’s website here.

According to a report entitled “The Impact of Regulatory Costs on Small Firms” just produced by Nicole V. Crain and W. Mark Crain for the Small Business Administration, the annual cost of federal regulations alone has reached $1.75 trillion.  That excludes the annual cost of taxes.  And that was as of 2008.

Combined, taxes and regulatory costs consumed a staggering 35% of America’s income in 2008, or $37,962 per household .  Alarmingly, that was the number before such new fiascoes as ObamaCare, “stimuli” and bailouts increased the burden.  Small businesses create most new jobs in America, but the authors highlight that regulatory costs hit them disproportionately hard relative to larger businesses (due primarily to economies of scale in dealing with regulatory compliance costs).  The authors found that businesses with fewer than 20 employees incur regulatory costs 42% greater than firms of between 20 and 499 employees, and 36% greater than firms with over 500 employees.  Per employee, small businesses face $10,585 in compliance costs versus $7,454 per employee for medium-sized firms, and $7,755 for larger firms.

As government gets bigger and bigger, the regulatory compliance costs only get more and more oppressive.  We needn’t search far to understand why the economy isn’t recovering and businesses aren’t hiring.

In a recent interview with CFIF, Quin Hillyer, senior editorial writer at the Washington Times and senior editor of The American Spectator, discusses the battle looming over the 2001 and 2003 tax cuts, and more.

Listen to the interview here.

Over and over again, President Obama and other defenders of trickle-up stimulus labeled 2009’s “Cash for Clunkers” a positive example of federal spending and market manipulation.  Obama himself eagerly called it an “overwhelming success,” and Nancy Pelosi curiously professed that it “has been successful beyond our wildest dreams.”

Economists’ verdict?  Not so much.

Writing for the National Bureau of Economic Research, economists Amir Sufi from the University of Chicago and Atif Mian of the University of California Berkeley report that Cash for Clunkers had no substantive net positive effect:

A key rationale for fiscal stimulus is to boost consumption when aggregate demand is perceived to be inefficiently low. We examine the ability of the government to increase consumption by evaluating the impact of the 2009 “Cash for Clunkers” program on short and medium run auto purchases. Our empirical strategy exploits variation across U.S. cities in ex-ante exposure to the program as measured by the number of “clunkers” in the city as of the summer of 2008. We find that the program induced the purchase of an additional 360,000 cars in July and August of 2009. However, almost all of the additional purchases under the program were pulled forward from the very near future; the effect of the program on auto purchases is almost completely reversed by as early as March 2010 – only seven months after the program ended. The effect of the program on auto purchases was significantly more short-lived than previously suggested. We also find no evidence of an effect on employment, house prices, or household default rates in cities with higher exposure to the program.”

This is Obamanomics and “stimulus” policy in a nutshell:  Billions in spending, but no positive effect.  Future generations forced to pay for it will not be retrospectively amused.

Last month, we highlighted the obscene self-serving nature of big government’s growth.  In “Why We’re Boiling Over:  Federal Salaries Now Twice That of Private Sector,” we detailed how federal workers earn double their private sector counterparts, and how incomes fell throughout America last year except in cities with higher concentrations of federal jobs.

Now, a Wall Street Journal study entitled “Washington Firms Soak Up Stimulus” reports that President Obama’s failed $814 billion “stimulus” package has awarded nearly $2,000 dollars per every Washington, D.C. resident.  That’s three times the national average of $695.95 per person across the rest of the country.  It’s not by coincidence, then, that D.C.’s unemployment rate of 6.3% is over three percentage points lower than the nation’s overall 9.6% rate.

Why is the nation’s fed-up electorate boiling over?  The federal “stimulus” trough provides yet another reason.

The Los Angeles Times reports that after receiving $111 million in federal stimulus money the City of Angels has only created 55 jobs.  Officials counter that whenever they get around to spending taxpayers cash the total jobs created will be 264.

Yeesh.

With California losing citizens and jobs to other states in record numbers, why not allow cities like L.A. to give $1 million to any business that promises to move into city limits and employ a domestic workforce?  Better yet, give 111 businesses $1 million in tax breaks to set up shop and revive the local economy.

American taxpayers can’t afford to spend millions of dollars for dozens of jobs.  (And government jobs at that!)  Since we need a much higher return on investment to get the economy growing again, why not direct money and incentives to businesses?  After all, they – unlike bureaucracies – can create jobs without perpetual government handouts.

Below is one of the latest cartoons from two-time Pulitzer Prize-winner Michael Ramirez.

View more of Michael Ramirez’s cartoons on CFIF’s website here.

This week, the Congressional Budget Office announced that the nation’s budget deficit has already reached $1.3 trillion, with another month to go in the 2010 fiscal year.  At 9.1% of gross domestic product (GDP), that makes it the second-largest deficit outside the World War II years, second only to last year’s deficit that reached 9.9% of GDP (mainly because GDP was lower in 2009 than 2010).  In a generous act of understatement, the CBO attributed this mind-boggling amount to lower revenues and “elevated spending associated with the economic downturn and the policies implemented in response to it.”  Another round of “stimulus,” anyone?

To put that in perspective, take a look at this straightforward bar graph.  President Bush’s final deficit was approximately $450 billion, which Obama tripled in his first year alone.  Now, Obama’s second deficit continues that unbearable amount.  Furthermore, efforts to scapegoat Bush for Obama’s first deficit fail, because such things as the $800 billion “stimulus” was Obama’s initiative, not Bush’s.

The Center for Individual Freedom yesterday lauched its OneMoreVote.org initiative designed to stop the reckless spending  in Washington.  The campaign was featured in Politico’s “Playbook, MSNBC’s “First Read” and The Hill’s “On the Money”:

Politico’s Playbook:

OUT TODAY: “The Center for Individual Freedom (CFIF) is announcing the launch of the ‘One More Vote’ campaign and website: OneMoreVote.org. The initiative is a grassroots-driven, online enlistment of activists across America focused on pressuring Congress and the administration to enact fundamental spending and budget reforms. … The One More Vote campaign name and concept is a nod to the Balanced Budget Amendment reform effort, a measure that fell just one vote short of passage. On Twitter: @OneMoreVoteCFIF.”

MSNBC’s First Read:

Per a source, “The Center for Individual Freedom (CFIF) is announcing the launch of the ‘One More Vote’ campaign and website: OneMoreVote.org. The initiative is a grassroots-driven, online enlistment of activists across America focused on pressuring Congress and the administration to enact fundamental spending and budget reforms.”

The Hill’s On the Money:

 More from fiscal hawks this week…

The right-leaning Center for Individual Freedom launches on Tuesday the “One More Vote” campaign, seeking to require supermajorities in both the House and Senate for passage of any budget that projects a deficit, any tax hike and any debt limit increase. The name is a reference to the balanced budget amendment, which fell short of Senate passage by one vote in 1997.  http://bit.ly/9agHwr

If you haven’t already joined this growing movement, please do so here.

So President Obama brought us a crippling $814 billion “stimulus,” and now his promised “Summer of Recovery” has come and passed.

Undeterred, he nevertheless instructs us that what America needs is another $50 billion, or 1/16th the original stimulus amount, in new highway, airport runway and rail construction.  Obama proclaims that “this will not only create jobs now, but will make our economy run better over the long haul.”  So let us get this straight.  Obama turned the $450 billion deficit that he inherited into consecutive $1.4 trillion and $1.3 trillion deficits for his first two years in office, commenced a regulatory onslaught against the private sector, threatened growth-killing regulations like “Net Neutrality” and union card-check, demonized the business community that creates jobs, signed stifling new burdens like ObamaCare into law and appears ready to oversee the largest tax increase in history this January 1.

But according to him, the basis of our economic malaise is…  lack of pavement?

15 Years and $13 Trillion in Debt Later, A Grassroots Campaign For ‘One More Vote’ Starts Anew

Washington, D.C. – The Center for Individual Freedom (CFIF) today announced the launch of the “One More Vote” campaign and its accompanying website OneMoreVote.org, designed as a grassroots-driven, online enlistment of activists across America focused on pressuring Congress and the administration to enact fundamental spending and budget reforms and change the wasteful tax, borrow and spend policies currently part of the culture in Washington, DC.

The One More Vote campaign is built on a foundation of both grassroots and legislative advocacy: activists become participants and supporters of the “Your Vote, Your Voice” coalition focused on registering spending and budget reforms as a top priority with lawmakers in Washington, while also presenting common-sense reforms that require a balanced federal budget and higher vote thresholds when raising existing taxes, imposing new taxes or raising the federal debt limit.

The One More Vote campaign name and concept is a nod to the last visible public battle over budget and spending reforms in Congress in 1995 and 1997: the Balanced Budget Amendment reform effort, a measure that fell just one vote short of passage.

“According to expert estimates, our nation’s debt of $13 trillion will skyrocket to more than $20 trillion by the year 2020, or sooner” said Jeff Mazzella, CFIF’s President.  “The fiscal policies being pursued by Congress and the administration only make matters worse.  President Obama’s budgets are projected to run up more debt than all other presidents in American history – from George Washington to George W. Bush – combined. Americans are angry with the status quo, ready to take action and ready to pressure Congress with budget principles that individual taxpayers already apply to themselves.”

The One More Vote effort lays the groundwork for real and meaningful legislation and allows voters and individual activists to become citizen cosponsors of the One More Vote agenda focused on reforming out-of-control spending policies and saving America from economic ruin.

The One More Vote agenda includes what CFIF is calling “The 60% Solution” reform package, which calls for a Constitutional Amendment requiring:

• A federal balanced budget annually;
• A 60% vote, in both the U.S. House and U.S. Senate, to raise the debt ceiling; and
• A 60% vote, in both the U.S. House and U.S. Senate, to increase taxes or impose new taxes.

Through OneMoreVote.org, individual Americans are participants in the reform process by learning more about The 60% Solution, signing on as a citizen cosponsors and contacting Congress to urge their support for The 60% Solution.

Read more here.

Join the effort here.

Follow on Twitter here. (@OneMoreVoteCFIF)

Moments ago, the Department of Labor reported that the nation’s unemployment rate jumped again to 9.6%.

As we reference in today’s Liberty Update commentary, this means that unemployment has now risen from 8.2% to 9.6% since Obama signed his $1 trillion “stimulus” bill in February 2009 (with the promise that unemployment would not exceed 8% under his spending plan).  By contrast, unemployment plummeted from 10.4% to 7.2% during the same timespan following the Reagan tax cuts.

This reconfirms what works:  more individual freedom, lower taxes, lower spending, less government.  It also reconfirms what doesn’t work:  more government control, higher taxes, more spending and more regulation.

Dana Milbank of the Washington Post pens a searing description of Christina Romer’s farewell luncheon at the National Press Club.  According to Milbank, Romer, until recently chairman of President Barack Obama’s Council of Economic Advisors, established four points during her speech to reporters:

(1)   She had no idea how bad the economic collapse would be.

(2)   She still doesn’t understand exactly why it was so bad.

(3)   The response to the collapse was inadequate.

(4)   And she doesn’t have much of an idea how to fix things.

So, where does Christina Romer go from here?  Back to her teaching post at UC Berkeley where she’ll presumably try to make reality fit into her mathematical models; only this time she won’t have to worry about being held publicly accountable for her conclusions.  (Such as the one where she argued that passing the first stimulus bill would keep unemployment below 8%…)

Below is one of the latest cartoons from two-time Pulitzer Prize-winner Michael Ramirez.

View more of Michael Ramirez’s cartoons on CFIF’s website here.

In a recent interview with CFIF, Bob Adams, Executive Director for the League of American Voters, discusses the need for Congress to extend the 2001 and 2003 tax cuts, which are set to expire at the end of the year. Failure to extend those tax cuts would cripple the nation’s already struggling economy. 

Listen to the interview here.

Below is one of the latest cartoons from two-time Pulitzer Prize-winner Michael Ramirez.

View more of Michael Ramirez’s cartoons on CFIF’s website here.

Below is one of the latest cartoons from two-time Pulitzer Prize-winner Michael Ramirez.

View more of Michael Ramirez’s cartoons on CFIF’s website here.