Have nothing to do with the [evil] things that people do, things that belong to the darkness. Instead, bring them out to the light... [For] when all things are brought out into the light, then their true nature is clearly revealed...

-Ephesians 5:11-13

Tag Archives: Surplus

Wisconsin Teachers Learning How to Live Free Again, Thanks to Act 10

This article was first published at The McAlvany Intelligence Advisor on Thursday, September 19th, 2013:

Under Wisconsin’s Act 10, every union must be re-certified by its members each year – a freedom denied its members in the past. Once certified, a union was formerly permanent. With regard to teachers, it required dues to be deducted from their paychecks, it demanded negotiating rights on their behalf, it mandated where they could buy their health insurance, and so on.

But when the teachers themselves were asked if they wanted to stick with their union, they said

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Social Security Trustees Celebrate: Trust Funds won’t be Broke for Years

With Friday’s announcement by the Trustees of the Social Security Administration that “reserves are still growing and will continue to do so through [the year] 2020,” it didn’t take long for groups like Strengthen Social Security (SSS) to chortle that not only is Social Security “fully affordable and structurally sound, [but it] will

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Social Security to Run Out of Money Much Sooner Than Estimated

The latest report from the Congressional Budget Office (CBO) about the inevitable insolvency of Social Security is discouraging enough without checking the CBO’s assumptions. A closer look at the report and those assumptions reveals a

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Don’t Tax Me; Don’t Tax Thee; Tax That Fellow Behind the Tree!

Tax

Tax (Photo credit: Tax Credits)

So said Russell Long, the Senator from Louisiana who served 39 years and whom the Wall Street Journal once called “the fourth branch of government,” so great was his influence. He got it right. The citizens are so dependent upon their government goodies that the entire discussion in Washington over the fiscal cliff is about increasing taxes and not cutting spending. The writer at Marketwatch.com got it exactly right:

As lawmakers negotiate to avoid the so-called fiscal cliff, the combination of tax increases and spending cuts that are due to take place on Jan.1, 2013, the silence on spending cuts is deafening. (my emphasis)

Some Republicans have tried, by outlining various cuts in spending that would bring the budget back to 2008 levels. But no one is listening:

House Republicans, both in the budget committee and in the Republican Study Committee, have outlined potential cuts that will bring spending back down to 2008 pre-recession levels. However, all Washington negotiators can do is talk about raising taxes, or not, and how much revenue can come from limiting deductions on one hand and economic growth on the other.

She says that Washington considers spending cuts as “poisonous.” We’ve heard this before. Cuts to Social Security was considered for years to be the third rail in politics: touch it and you die. George Bush trotted out a plan to modify Social Security with private accounts. Remember them? Didn’t think so. Down the memory hole.

Biden can’t believe the Republicans even want to

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Three State Studies Confirm Freedom Works Best

North Dakota state quarter

North Dakota state quarter (Photo credit: Wikipedia)

Each year 247 Wall St. publishes the results of its survey of all 50 states and then ranks them from top to bottom – from “best run” to “worst run.” CNBC does the same only with a more concentrated focus on the business environment in each state, and then ranks the states on their overall “measure of competitiveness.” The Mercatus Center at George Mason University looks at all 50 states from the perspective of individual freedom and then ranks the states based on its Index of Personal and Economic Freedom.

The parallels and correlations between economic and business performance and personal freedom are clear and persuasive: when state governments stay within their limits of protecting lives and enforcing contracts, the states thrive. And vice versa. North Dakota and California are examples sufficient to prove the point.

247 Wall St. admits that measuring the effectiveness of how a state government manages its affairs and allows the free market to operate is

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The Fiscal Cliff: What Really Needs to Be Done

Piggy Bank

(Photo credit: Images_of_Money)

Now that the national elections are history, attention in Washington is firmly focused on the “fiscal cliff”: the day of reckoning created by the congress during the budget ceiling debate in the summer of 2011. When the Super Committee failed in its mandate to create a plan to address the deficits and the national debt, the result was the misnamed Budget Control Act of 2011 which, in current parlance, kicked the can to December 31, 2012. All that act did was to raise the debt limit immediately by $400 billion, thus averting a government shutdown, while allowing further increases in the debt limit without another congressional confrontation with the White House. The tradeoff was the promise of spending cuts in the future.

That future is now.

If nothing is done, and the economy runs off the so-called fiscal cliff, the impact will be a combination of $7 trillion worth of tax increases and spending cuts over the next decade.

There will be automatic spending cuts of $120 billion annually in both defense and non-defense spending, there will be increases in income and capital gains tax rates, the reestablishment of the so-called “death tax” (the estate tax), 27 million households will now be subject to the “wealth tax” under the Alternative Minimum Tax (AMT), while those enjoying the payroll tax “holiday” will see their Social Security withholding taxes return to the 6.2% rate from the current temporary 4.2% rate. There would be the confluence of another flurry of other tax increases and spending cuts as well, including 27% cuts to Medicare providers and at least four other tax increases imbedded in Obamacare.

According to the Heritage Foundation, the fiscal cliff will cost families making $70,000 a year more than

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Obama Intends to Bring Down Capitalism

ENEMY OF THE ECONOMY

ENEMY OF THE ECONOMY (Photo credit: SS&SS)

I have great respect for the work done by the Cato Institute. I attended one of their week-long economic seminars a couple of years ago, thanks to my generous brother, and was greatly impressed and informed by their work. I still refer to the copious notes I took there.

But Alan Reynolds fails to see that Obama intends the results of his actions. Reynolds explains Obama’s actions through abysmal economic ignorance:

In a recent Wall Street Journal op-ed (November 2) President Obama wrote that “in the eight years after” Bill Clinton left office, “we followed a different path. Bigger tax cuts for the wealthy we couldn’t afford. . . . The result of this top-down economics? Falling incomes, record deficits, the slowest job growth in half a century, and an economic crisis . . .”

Obama had taken up that theme during the first presidential debate, arguing that “The approach that Governor Romney’s talking about is the same sales pitch that was made in 2001 and 2003, and we ended up with . . . the worst financial crisis since the Great Depression.”

This is a remarkably imaginative theory — albeit one that reveals appalling economic illiteracy. Who else would have imagined that the housing bust and subprime-mortgage crisis were actually caused by cutting the top two tax rates in mid-2003?

He goes on say that at least Obama is consistent in his

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George McGovern: The Liberal Who Got Mugged

English: Senator George McGovern speaking at t...

Senator George McGovern speaking at the Richard M. Nixon Library and Museum in Yorba Linda, California during his book tour (Photo credit: Wikipedia)

George McGovern, known for his ultra-liberal stance on issues of his day, passed away on Sunday, October 21st, at Dougherty Hospice House in Sioux Falls, South Dakota, at age 90.

Active in promoting liberal programs almost from the first, McGovern was convinced that government could be used as an instrument to improve society, especially in providing food for the poor in America and around the world. He saw the American government and the United Nations as tools to promote sustenance for them. He helped create the United Nations’ World Food Program which distributed U.S. food “surpluses” to needy people abroad, and issued the McGovern Report, which set up nutritional guidelines for Americans.

He served as U.S. Ambassador to the UN agencies for Food and Agriculture, and was appointed the first UN Global Ambassador on World Hunger in 2001.

But he is primarily remembered for

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Tax Cuts for the Rich or Tax Relief?

English: The Subsidised Mineowner - Poor Begga...

(Photo credit: Wikipedia)

It’s all about how you frame the question, isn’t it? The issue appears to be tax cuts for the rich: should we or shouldn’t we? By framing the question that way, discussion is limited. By re-framing the question, it changes the answers. Thanks to Investors Business Daily for pointing this out.

President Obama warned that GOP hopeful Mitt Romney’s proposed income-tax  cuts will “cost” the government revenue and repeat Bush policies that he says  blew up the deficit.

“The centerpiece of his economic plan are tax cuts,” Obama said at Tuesday’s  presidential debate in New York. “That’s what took us from surplus to deficit.”

The mantra from the Obama camp is annoyingly repetitive and consistently wrong:

The Obama camp has strenuously opposed Romney’s pro-growth strategy, arguing  that tax breaks, especially for the wealthy, “rob” programs for the middle class  and poor because they don’t raise revenues and don’t “pay for themselves.”

“It has never been done before,” Vice President Joe Biden insisted in last week’s debate with Romney running-mate Paul Ryan.

But history has shown that when entrepreneurs are allowed “relief” – to keep more of what they earn – they earn more. What a surprise!

The historical tables in the back of the latest “Economic Report of the  President” show that the Bush tax cuts generated more, not less, federal  revenues — a phenomenon that also held true for Presidents Clinton, Reagan and  Kennedy.

All four leaders, two Republicans and two Democrats, slashed taxes for top  individual earners or investors. And once these rate reductions took effect and  began stimulating economic activity, record individual income-tax receipts  poured into the U.S. Treasury.
A great example is what happened when President Kennedy, against the advice of his Keynesian advisors, cut tax rates on

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Social Security is Cratering

WaPo: FACT CHECK: Social Security adds to budget deficit

“Over 77 years and now through 13 recessions, Social Security has not added one penny to our deficit or our debt,” Rep. Xavier Becerra, D-Calif., said at a recent hearing by the House Ways and Means Social Security subcommittee. Becerra is the top Democrat on the panel.

Roosevelt Signs The : President Roosevelt sign...

President Roosevelt signs Social Security Act (Photo credit: Wikipedia)

Becerra is a fool. He sports an impeachable 17 (on a scale of 100) Freedom Index rating based on his voting record’s hewing (or not!) to the limitations of the Constitution. So his economic ignorance is only exceeded by his Constitutional treachery!

Social Security is broke. It was broke from the moment it started back under FDR because it was based on the flawed premises of a Ponzi scheme. It’s just taken this long for its unwinding to become obvious. So obvious, in fact, that politicians like Becerra are forced to make stupid statements in order to defend it.

WaPo (The Washington Post)—the liberal establishment’s most trusted mouthpiece) admitted:

For nearly three decades Social Security produced big surpluses, collecting more in taxes than it paid in benefits. The government, however, spent that money on other programs, reducing the amount it had to borrow from the public, including foreign investors. That’s why some advocates complain that Congress has “raided” Social Security…

Social Security is now spending a portion of the interest because it needs cash to cover monthly benefit payments. This year Social Security is projected to pay $789 billion in benefits and administrative costs and collect $623 billion in payroll taxes and taxes on benefits, a shortfall of $166 billion.

About $112 billion of the shortfall is from a temporary reduction in the payroll tax that is scheduled to expire in January. There is no question that money adds to the budget deficit because Congress financed the tax cut through borrowing. (my emphasis)

Do you see what just happened here? A liberal politician is trying to defend Social Security, and the liberal WaPo is saying he’s wrong, that Social Security “adds to the budget deficit.”

That’s really quite remarkable, when you think about it.

North Dakota: A Study in How the Free Market Works

English: An Oil Pump in western North Dakota

The continuing boom in North Dakota seemingly has no end. Last June oil production from the Bakken Formation exceeded 11 million barrels a month. In February it reached 16 million with estimates that by late spring North Dakota could be producing more oil than either California or Alaska. That’s more than double what the state produced just two years ago.

The population boom in Williston and elsewhere continues to set records. The oil industry employs more than 30,000 people and could exceed 100,000 if production rises as expected to a million barrels a day. There are so many job openings that the state is sponsoring trade fairs across the country and has to deal with—are you ready?—budget surpluses!

Comparisons between North Dakota and other states struggling with deficits and high unemployment abound. Steve Moore wrote about it in the Wall Street Journal, noting that North Dakota has a budget surplus of $1 billion out of a $3.5 billion budget and it has already cut income taxes and is considering further reductions. Complete funding for the state’s pension plan is accomplished every year and the state is building “infrastructure” projects: roads, bridges, railroads and pipelines.

Moore compares this to the issues facing California: five straight years of budget deficits with the current fiscal year’s shortfall expected to exceed

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U.S. Manufacturing Is Making Headway

Shipping containers at Port Newark-Elizabeth M...

The numbers posted at Investors Business Daily over the weekend by John Merline were impressive: U.S. manufacturing profits last year exceeded $600 billion, almost tripling since the bottom of the recession, while jobs in manufacturing have increased by 400,000 in the past two years. Unemployment in manufacturing has been below the national average for eight straight months, and the industry itself has been growing at three times the rate of the overall economy.

More jobs. Higher profits. Lower unemployment. Faster growth. All good. Economist Mark Perry is on board with the new robust sector: “By all relevant measures of economic performance…American manufacturing remains the shining star of the U.S. economy.” And this is taking place right under the noses of politicians who are decrying the perceived woes in manufacturing, such as Rick Santorum, who said:

We went from about 21% of jobs in this country when I was a kid being in manufacturing down to 9%. We lost those jobs overseas. We need to bring them back.

He may be right about the numbers but wrong about being worried about them. Manufacturing lost 7 million jobs since its peak in 1979 but the productivity of the workers remaining has improved enormously. According to Joshua Feinman, chief global economist at DB Advisors, “Productivity has grown much faster in manufacturing than in the economy as a whole.” In fact, despite the loss of jobs manufacturing output has tripled in this country since 1980 and the United States remains the largest

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The Story Behind the Best- and Worst-Run States

Seal of Wyoming

In its second annual survey of the best- and worst-run states, 24/7 Wall St. noted some significant changes but the same message: “States can do a great deal to control their fate.”

The report noted:

Well-run states have a great deal in common with well-run corporations. Books are kept balanced. Investment is prudent. Debt is sustainable. Innovation is prized. Workers are well-chosen and well-trained. Executives, including elected and appointed officials, are retained based on merit and not politics.

Based on data collected from numerous sources such as Standard & Poor’s, the Bureau of Labor Statistics, the U.S. Census Bureau, and the Tax Foundation24/7 Wall St. then ranked each state on its performance in 10 categories. The study concluded that the best-run state was

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Germany’s Finances Weak and Getting Weaker

Angela Merkel painted portrait _DDC8551

The “disastrous” failure of the German bond auction on Wednesday when buyers failed to bid the offering and Germany’s Central Bank—the Bundesbank—had to step in and purchase nearly 40 percent of the offering came just a day after SpiegelOnline posted an article critical of the country’s finances. The article virtually accused Chancellor Angela Merkel and her Finance Minister, Wolfgang Schauble, of “cheerleading” the economy’s supposed strength while ignoring major weaknesses. Merkel says her country has “a clear compass for reducing debt [and that] getting our finances in order is good for our country.” Schauble was an echo: Germany is a “safe haven [because] the entire world has great confidence in both the performance and soundness of the fiscal policies of the Federal Republic of Germany.”

Cracks in Germany’s economy were noted by Professor Wilhelm Hankel of Frankfurt University back in November of 2010: “Germany cannot keep paying for bail-outs without going bankrupt itself. This is frightening people.” He added,

You cannot find a bank safe deposit box in Germany because every single one has already been taken and stuffed with gold and silver. It is like an underground Switzerland within our borders. People have terrible memories of 1948 and 1923 when they lost their savings.

Additional cracks in Germany’s economy were revealed in August this year in the Washington Post, which noted that

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How Canada Cut Spending and Got a “Payoff Decade”

President George W. Bush and Canadian Prime Mi...

From Reuter’s interview with former Canadian Prime Minister Jean Chretien in August came a much fuller understanding of the forces that moved the Canadian economy from a basket case to a decade of robust growth and budget surpluses.

A liberal much in the mold of liberals in the Democrat Party in America, Chretien took over in November 1993 as his country was suffering from high unemployment, a stagnant economy, and increasing interest rates on its national debt. Its ratio of debt-to-GDP was approaching 70 percent while its annual deficits were nearly 6 percent of GDP and increasing. The economy was ranked just above Italy among the Group of Seven, Canada’s peers. As Scott Clark, Chretien’s Deputy Finance Minister put it: “We used to thank God that Italy was there because we were the second worst in the G7.”

In a rare interview, Chretien was forthright about what happened to turn the economy around and set the stage for the country’s “Payoff Decade.” He said,

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New York Times Distracts from the Real European Story

German Logo of the ECB.

Thursday’s article in The New York Times by writers Jack Ewing and Nicholas Kulish about the “rift” between factions over the role of the European Central Bank (ECB) was a distraction and misdirected attention from what is really happening there. The piece makes it sound as though the ECB is standing firm against pressures to have it buy up the debt from Greece and Italy in order to keep the debt “contagion” from spreading elsewhere.

For instance, the article quotes Spain’s Prime Minister, Jose Luis Rodriguez Zapatero, as saying that he expected the ECB to do whatever was necessary, for “this is what we transferred power for…[to] defend the common policy and its countries.” Of course Zapatero would have to say that or he would be gone, just as unelected bankers replaced elected leaders in Greece and Italy. Just a reminder as to who is in charge was reflected by the recent rise in Spain’s borrowing costs, the highest since 1997, and exceeding the “default” level of 7 percent on its 10-year bond. But nothing was said in the article that Zapatero’s comments reflected a desire to save his skin.

In fact the ECB has been taking an active role economically and politically by buying up the debt of those countries in massive amounts, already in excess of $250 billion, and manipulating interest rates to favor the newly installed rulers Mario Monti in Italy and Lucas Papademos in Greece. But authors Ewing and Kulish prefer to present the ECB as being run by “fiercely conservative stewards” who have “steadfastly resisted letting it take up the mantle of lender of last resort.” And to support that falsehood the authors enlisted the help of

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Harvard Students’ Walkout Demonstrates Economic Ignorance

Harvard

When 70 students attending economics professor Greg Mankiw’s Economics 10 class on November 2nd walked out in protest, they wrote an open letter to him explaining why:

Today, we are walking out of your class…in order to express our discontent with the bias inherent in this introductory economics course…

[The] course…espouses a specific—and limited—view of economics that we believe perpetuates problematic and inefficient systems of economic inequality in our society today…

There is no justification for presenting Adam Smith’s economic theories as more fundamental or basic than, for example, Keynesian theory…

If Harvard fails to equip its students with a broad and critical understanding of economics, their actions are likely to harm the global financial system. The last five years of economic turmoil have been proof enough of this.

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Walker Rules Save Wisconsin School Districts Millions

Milwaukee Teachers and Supports Walk to the Go...

In late September the Wisconsin Education Association Trust (WEA Trust) announced that it had successfully outbid another insurance carrier to provide health insurance coverage for some 11,000 state employees in west-central Wisconsin. WEA Trust President Mark Moody happily concluded, “It really affirms, independently and objectively, that our rates are competitive.”

The WEA Trust, created in 1970 by Wisconsin’s largest teachers’ union, the Wisconsin Education Association Council, or WEAC, had become the epicenter for criticism that its collective bargaining rules kept local school districts from requesting bids from competing health insurance companies even though there was the potential for substantial savings in doing so. When the new rules became law on June 29, many districts took advantage of the freedom to request bids, and discovered that in many cases they were

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Canada’s Remarkable Economic Recovery

Happy Canada Day!

Image by Ian Muttoo via Flickr

In its annual Index of Economic Freedom, the joint effort by the Heritage Foundation and the Wall Street Journal, Canada ranks 6th among the 179 countries of the world, ahead of the United States (9th), the United Kingdom (16th), Japan (20th) and Germany (23rd). Considering ten components of economic freedom (among them: Business Freedom, Fiscal Freedom and Government Spending), the report ranks countries on the degree to which “individuals are free to work, produce, consume and invest in any way they please, with that freedom both protected by the state and unconstrained by the state.”

The latest report from the Canadian Labour Force Survey illustrates the degree to which Canadians have benefited from

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Social Security: Way Beyond Tweaking

Scanned image of author's US Social Security card.

Image via Wikipedia

Just one year ago this week the Senate Special Committee on Aging, headed up by wealthy and aging Senator Herb Kohl (D-WI), announced that massive shortfalls in funding for Social Security could be papered over with just a few modest “tweaks“:

Modest changes can be made over time that will keep the program in surplus. They are not draconian, as the report points out, and they can be done and [they] will be done.

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Many of the articles on Light from the Right first appeared on either The New American or the McAlvany Intelligence Advisor.