Squeals On Wheels

Recently, a small part of the Trump administration’s budget proposal generated a series of high-pitched squeals across the United States.  Said squeals which could mostly be found in such squeal-oriented places like Facebook, Twitter, and college campuses, where squeals propagate like hippies at a free lunch buffet, and where economic reality enjoys a permanent holiday.

And the root cause for the squealing?  A complete misunderstanding of the federal budget and how some non-profits are funded .  But the squeals of anguish were not rallies to the cause of federalism.  No.  Instead, they were cries of outrage that Trump was cutting the Meals on Wheels program.  A program that relies, so heavily, on government grants.

 

Oh, wait.  It doesn’t.  It’s 3% of their budget (page 18).

And…..it’s 3 percent.

As Reason has noted, the issue is much less about the individual programs that receive grants.  What Meals on Wheels does is a fantastic example of what local effort, and local control, can do to positively impact lives, and help people who need just a little bit of help, a meal, and even a wellness check, when no one is doing that for them.  It’s the vehicle that spends billions per year on administering and doling out dollars that is the source of the issue, and ultimately some level of corruption – the Community Development Block Grant Program.

What’s the result of lading a trough filled with pork in front of politicians eager to buy votes?  The quick appearance of dollar-guzzling politicians, seeing an opportunity to buy something (votes) with someone else’s money (yours and generations of unborn saddled with federal debt):

You don’t need to look far in the past to see this sort of corruption taking place. In June, the Department of Housing and Urban Development (HUD) sent a scathing letter to the Mayor of Honolulu Hawaii, calling on the city to return nearly $8 million in CDBG funds that it gave to Opportunities and Resources Inc. (ORI), a nonprofit redevelopment organization in central Oahu. The Aloha Gardens Wellness Center and Camp Pineapple 808 both were projects developed by ORI with federally issued CDBG money meant to serve elderly and disabled persons, but since completion, the projects haven’t exactly been used for their advertised purpose.

The HUD report claims ORI had been marketing the centers to the public as venues for weddings, parties, banquets, fundraisers, corporate retreats, conferences and family reunions. The city also lent ORI nearly $1.2 million in CDBG funds between 1989 and 1995, which it decided to forgive back in 2010. HUD found that this decision was made by city employees who were running for elected office while receiving campaign donations from ORI representatives.  The report states:

“ORI has maintained significant support over many years by the direct involvement of high ranking City and State officials…The direct involvement of the officials’ appears to have placed pressure on staff resulting in the City ignoring regulatory violations in favor of completing the project and satisfying ORI’s requests.”

In other words, the funding becomes the driving policy directive, not the service that the funding might itself provide.  The funding model subverts the local control because the dollars are critical to a political outcome, less so in addressing a local need.

Local control, and local accountability for dollars spent, should be the watchwords.  But because the federal government throws billions around, annually, in thousands of programs, it would be extremely difficult to say no to those funds if you’re sitting in a small municipal office, wondering how you’re going to affect some local change.  Which then creates the puppet strings that federal agencies, and ultimately politicians, use to buy votes, and influence voters.  Once the city or state becomes hooked on the federal dollars, they can no longer say no to them – and are adversely affected when funding for those programs becomes a political football.

The accretion of these programs, in the federal budget, is what has given rise to the outsized spending and record deficits seen during the last 8 years.  This growth isn’t directly attributable to one administration, but the Obama administration stomped down hard on entitlement spending, then tried to laughably claim that it reduced deficits – record deficits the administration itself had set in the years preceding its final year.

The result was a doubling of national debt in 8 years, a doubling of the debt that took over 200 years to first accumulate.  We have had 4 years of trillion-dollar deficits.  The first year the government started spending over a trillion dollars per year was 1987.  30 years later, we have deficits bigger than the total annual spend in 1987.  Today we’re borrowing more to fund an annual deficit than our total spend was 30 years ago.

I’m noticing a trend here.

 

Hey, what’s a trillion in borrowing, amongst friends?

The historical record doesn’t show any sign of slowing down in spending, which means a further erosion of local control, leave alone any kind of spending efficacy metric that would allow for decision-making regarding the growth or reduction of spending on a program.  Once a program is established, whether or not it’s doing something good or bad (if you can even quantify those outcomes), it will never, ever go away.  It’s too late now.

And any call to reduce spending is met with the squeals.  The self-agonized cries of those who believe, fervently, that it’s up to the federal government to fix local problems, address local needs, through taxation.  Which is, in a way, a tithe of the conscience – that one is off the hook to get off the couch on a Sunday to help someone else, because the government is doing it for them, through their income taxes.

Or, more to the point, through the taxes of those filthy, evil rich people.  The same people who pay 97% of all income taxes collected.  Which will never, ever be enough to pay for the programs that help politicians get elected, to grow the spending of government again next year.  When politicians have a credit card with a $1.5 trillion dollar limit on it, what’s their incentive to not spend more than we have?  For them, the downside to spending less is not getting re-elected.

Until those political incentives change, you’ll continue to see the growth in federal outlays, and a continuing reduction in incomes relative to that spending growth, as the weight of spending and borrowing drags the economy into a perpetually smaller cycle of growth.  It’s already happening.

Trump’s budget, while flawed (like every budget before his), is actually looking to address an issue around federalism, which is:  Why do you need a federal government to sink its controlling claws into a local effort to help those in need?  Why not just cut the check to your local charity of choice and avoid the federal middleman?

Why give more control to someone else over your own choices?  Hopefully the answer to that isn’t “Because then I don’t have to think about it”.

 

 

 

 

 

 

Barrynomics: Keynes Unchained

What a difference 8 years can make – if you’re interested in holding public debt.  The Obama administration leaves office just inches away from a $20 trillion dollar debt, when in 2009 that administration inherited $10 trillion in debt.  It took the US a couple hundred years to get to $10 trillion; Obama created almost that much debt in 8 years.

debt-2

Trillion-dollar deficits became the norm from 2009-2012, as “stimulus” spending was touted as the fix to everything that ails the economy.  A question never asked in those conversations might be “If federal spending fixes recessions, and federal spending goes up every year, without fail, why do we ever have recessions?”

Because the answer would be “I don’t know”, and historically there’s no correlation between increased federal spending and increases in GDP – even with federal spending as a component of GDP.  As shown below, federal expenditures continue to increase, debt increases, and GDP bounces all over the place, but in a downward direction.

Finally! Evidence that federal spending fixes everything.

Finally! Evidence that federal spending fixes everything.

In fact, in 2014 it was predicted that the shorter-term positive impacts would inevitably give over to negative growth impacts:

“In contrast to its positive near-term macroeconomic effects, ARRA will reduce output slightly in the long run, CBO estimates — by between zero and 0.2 percent after 2016,” the analysts said in their new report.

They said the cause is all of the borrowing for the $830 billion program, which dramatically boosted the federal debt.

“To the extent that people hold their wealth in government securities rather than in a form that can be used to finance private investment, the increased debt tends to reduce the stock of productive private capital. In the long run, each dollar of additional debt crowds out about a third of a dollar’s worth of private domestic capital,” the CBO estimated.

As icing on the Obama administration’s economic cake, GDP in the 4th quarter of 2016 came in at a whopping 1.9%.  For 2016, the annual rate came in at 1.6%, down from 2.6% the year before, which seems to correlate to the CBO estimates above.  So instead of going out with a bang, Barrynomics goes out with an agonized whimper.

What is interesting, though, is that there’s a correlation between incomes and deficits – but in an unexpected direction.  As deficits get bigger (meaning gov’t spends more than it takes in), incomes decrease, at precisely the time when deficit spending is supposed to improve negative income trends through stimulus spending.

So stimulus spending has a negative effect on incomes? That's not the America Joe "Recovery Summer 2009" Biden described to me. He told me I'd be able to buy a Camaro soon!

So stimulus spending has a negative effect on incomes? That’s not the America Joe “Recovery Summer 2009” Biden described to me. He told me I’d be able to buy a Camaro soon!

The smaller the deficits, the larger the incomes.  The bigger the deficits, the smaller the incomes.  Even if federal spending during recessions is designed to offset income reductions through job losses, etc, it apparently does not have that effect.  At all.

Which runs entirely counter to the basic ideas espoused by Keynes, and that federal spending (including significant deficit spending) could dampen recessionary effects in the short run, and in the longer run help grow the economy.

biden-camaro

Want to go for a ride, big fella?

But there’s no real way to account for the disparate impacts of that spending, which has to grind through the political mill and get disbursed through the bureaucracy via changes to funding, grants, etc, which then has to be actually spent by the receiving agencies.  That spending can’t ramp up to full speed on a dime, and if it’s a larger multi-year project, any benefits of that spending (through new hires and their subsequent income increases, impacting aggregate demand) would be delayed, at best, for an unknowable period of time.

Finally, because the civilian labor force participation rate is at historical lows (below), and seems to correlate to the drop in GDP, it seems that any incentives one has to drop out of the labor force – increases in unemployment benefits, expanded entitlement spending, etc – might have as its final result an unanticipated reduction in economic growth.

A reduction that would apparently come as a surprise to both Keynes and Obama.

 

gdp-and-civ-labor-force

 

Recovering From Obama’s Decade of Recovery

The improbable Trump presidential win has led to the most obvious of questions, which is – what can Trump do for the economy?

To answer that, let’s take a look at what’s left of the economy after 8 years of Barry’s version of “economics”, which seemed to largely consist of increased federal spending (to new record levels), massive increases in the regulatory state, and condemnation of those who pay over half the income taxes the federal gov’t seems to so happily gobble up.

It turns out that federal spending and the growth of the federal government does not increase GDP, even when federal outlays are a component of the GDP metric.  The spike in spending in 2008 (these are YOY percentage changes) and again in 2010 reinforce that conclusion – even if you assumed a causal relationship between spending in 2008 and the return from negative GDP in 2008/2009/2010, that conclusion becomes demonstrably false after 2010’s spending, which almost matches 2008, and GDP for that year is flat and decreases afterwards.

gdp-and-fed-spending

 

There’s virtually zero correlation to federal spending and economic growth, especially in this “recovery” as it pertains to job growth.  As an example, let’s look at YOY job growth by job category, October 2015 to October 2016 (from our friends at BLS.gov):

You can almost *taste* the deliciousness of job growth here. Almost.

You can almost *taste* the deliciousness of job growth here. Almost.

Health care and social assistance are largely funded by tax dollars – Medicare and Medicaid are an enormous component all health care spending, so the jobs “created” in health care, are, in part, funded by taxes.  Pensions, in the category below, includes Social Security, disability insurance, workers compensation, etc.  Health care in the category below, includes Medicaid, Medicare, and everything in between.  Over half the 2016 federal budget – $3.854 trillion – is consumed in these two categories.

 

2016-spending-snap

So while federal spending in the largest job-creating categories means that, well, we’re borrowing 40% or so of every dollar spent to create jobs in areas that are already funded by tax dollars, means we’re chasing a negative feedback loop if we think federal spending can simply fund an infinite amount of jobs, and/or increase incomes.

In fact, if you take a look at federal expenditures and median household incomes, there’s almost an inverse impact on incomes – federal spending goes up and median household incomes stay the same, or actually decrease.  When spending goes down, in 2013-2014, incomes actually go up.  Which should tell you all you need to know about using federal spending to increase incomes.

Not really a strong argument for Keynesian economics, that.

Not really a strong argument for Keynesian economics, that.

So, despite 8 years of the 2009 Recovery Summer, what were Obama’s results after assuring us that we needed to spend trillions we didn’t have, else the economy would crash?  A fairly wrecked economy that’s stumbled forward for 8 years – 8 years! – with incomes staying fairly flat, and frequently dipping into negative growth rates.

As Fortune points out in a recent article, it can be argued that for the first time in modern history, there has been no economy recovery.  At least according a Gallup study (linked from the Fortune article), titled “An Analysis of Long-Term US Productivity Decline“:

Rothwell (the study’s author – ed.) goes on to argue that regulatory and tax reform is the main culprit for America’s economic woes, and that the healthcare, housing, and education industries have been particularly harmed by the government. He points to statistics showing that despite rapidly rising costs in all three of these industries, the quality of the products and services offered has stagnated.

Growth in government spending just exacerbates the negative trends.  As an example, new firms per capita are half of what they were in 1981 – and new firms, and new jobs, are the engines that drive future business growth.  From page 73 of the study:

ENTREPRENEURIAL ACTIVITY HAS DECLINED

The escalating cost of healthcare may also have implications for the creation of new firms or startups. There is always an element of risk in creating a new business, but the rising costs of healthcare magnify that risk. In previous decades, an employed worker could quit his or her job and pay for healthcare expenses out-of-pocket if necessary. Now, out-of-pocket expenses for the non-insured are extremely high, so an employed worker who quits to start a business likely gives up a valuable healthcare plan and may have to impose those costs on his or her own fledgling business at a time when revenue is dangerously low. Provisions in the Affordable Care Act were designed to make it easier for the self-employed to purchase health insurance, but even in 2014, 23% of self-employed workers between the ages of 18 and 64 lacked health insurance, compared with 13% of wage and salary workers. For those who are self-employed and have insurance, only about half get it through their businesses.93 Whatever the reasons, people are much less likely to either be self employed or start firms with at least one employee. The number of new firms with at least one worker per capita has fallen by about half since the late 1970s. Although the downward trend has been going on for decades, it accelerated over the Great Recession and has not inched back up.

new-firms

If the United States is to recover from Obama’s Recovery Decade ™, a good place to start would be the dismantling of federal spending onditch a permanent basis, and a re-set in Congress in terms of what it can and should be doing to foster economic growth.  Instead of a decade of piling on regulations and costs in a recession, maybe it could start lifting those weights off of businesses’ backs, and see what happens.

Because whatever Obama’s been trying for 8 years is a perfect recipe for keeping the economy, and the people who do all the work in it, permanently in the ditch.

 

 

 

Leviathan Shrugged

pacific-rim-kaiju-otachi-more

Hmmm – I wonder what a boat filled with taxpayers tastes like?

As Americans set course on a journey that would net them two presidential candidates who are the least liked in what appears to be all of history, one or two or thirty things come to mind, regarding the general irrelevance of which party wins the presidency.  Let’s start at the top.

It does not matter who the next president is:  Federal spending will continue to grow faster than the pace of inflation, or population growth, GDP growth (even with federal spending as one of its components), or the growth of my 401k.  Just taking the last 25 years or so, what is reliably and consistently growing, so much so that if it were an investment option, people would be buying it like cakes that are really hot?

Spending.  Spending is king.

fed-spend-and-gdp

“But wait!” gasps the Keynesian.  “Federal spending is needed during recessions to jump-start the economy, and reduce unemployment”.

Sure – but those dollars spent come from somewhere, in the form of taxes and borrowing, and when that happens, those dollars aren’t available for capital spending, investment, savings, etc, all of which actually creates jobs in the private sector.  It doesn’t have the net effect of taking dollars from the private sector to spend them via the public sector, which gains nothing, other than votes for office and an increase in the debt and deficit.

Unemployment increases and decreases independent of expenditures - not because of them.

Unemployment increases and decreases independent of expenditures – not because of them.

The reality is that the unemployment rate is more closely tied to the dwindling labor force participation rate than it is to federal spending – which runs counter to the standard Democrat response to any kind of recession, consisting of mostly “let’s spend even more money than usual under the guise of helping”.

spend-unemp-and-lbr-force

Participation rate goes down at roughly the same pace as unemployment, independent of increases in federal spending.

In fact, if you go back to 2000, the labor force starts dropping dramatically when, exactly?  Let me check – ah, that’s right, as soon as Barack Obama assumed the presidency.  That drop in participation accounts for nearly all the unemployment reductions since the recession started.

Recovery 2009 never looked so good! Thanks Biden!

Recovery 2009 never looked so good! Thanks Biden!

But it does, of course, get worse.  If you look at unfilled job vacancies, going back to 2001 – we still have (slightly) fewer unfilled vacancies as of 2015 as we did in 2001 or so.  Yet federal spending doubled during that time.  If you use vacancies – jobs available – as a barometer of growth, we’ve doubled federal spending for no net gain in available jobs.

unfilled-gigs-and-spend

All of which is just another reason why the person occupying the White House can speak to different policies, preferences, and budget priorities, but every year, spending goes up.  The deficits, once deemed unpatriotic due to their size by Obama, yet doubled under his presidency, and the subsequent debt, are just choices being pushed onto future generations.

Or, better stated – a reduction of choices, for them.  Because they will be footing the bill for what we spend now, and they didn’t even get a chance to vote on the lesser of two evils, whoever you might end up choosing to vote for on Election Day.  The less they have to spend, the less free they are, to make their own choices.  We are choosing for them.

In other words, Leviathan, in the form of the federal government, doesn’t care who wins.  Leviathan will continue to feed off the labor of the citizens (those still working, anyway), and the borrowed future earnings of those not even born yet.  The only way to kill this beast is to starve it, and no modern president, or presidential candidate, seems interested in taking that one sane step forward.

 

 

The Power of No

What happens when you have the power to deny, to say “no”?  Then you are in control.  The person denied has no control, no power, no other option.  The power to say “no” is like being an umpire in a baseball game.  You can complain all you want, yell, kick some dirt (if you’re a

When good people hear the word "No". OK, marginally good people.

When good people hear the word “No”. OK, marginally good people.

former Yankee manager), or throw second base, but 99.9% of the time, you will not get what you want.  You’ll go back to the dugout (and like it), or you’ll get ejected.

Those are your two options.  That’s it.  Neither option satisfies the complaint.

In markets, competition means choices for the buyer, of whatever product or service they’re interested in acquiring.  With competition comes incentives for the business to provide a better service at a lower price, in order to gain more market share.  Choice erases the power to say “no”, because if you don’t like what you’re offered, you can take your business elsewhere.  Now the customer has the power to say “No”.

But what if you’re the only game in town?  A monopoly?  Those are generally illegal, which is why the government spends so much time enforcing antitrust laws.  In fact, they helpfully define them:

Many consumers have never heard of antitrust laws, but enforcement of these laws saves consumers millions and even billions of dollars a year. The Federal Government enforces three major Federal antitrust laws, and most states also have their own. Essentially, these laws prohibit business practices that unreasonably deprive consumers of the benefits of competition, resulting in higher prices for products and services.

But what the DoJ does not do is enforce antitrust laws against the US government, which has the market cornered (so to speak) on cornered markets, especially for health care, in Medicare and Medicaid, and other recipients of federal…care.

In fact, for some on the receiving end of the government’s monopoly on health care for their particular demographic, not being able to shop for better coverage means you’re stuck with whatever the government gives you.

In some cases, that means much more than sub-standard care.  It means catastrophically bad care, which is why only the US government could be the entity providing “care” to veterans, and have them die on their watch.  In the very place that’s been created and funded specifically for their needs.

Who has had the responsibility and oversight for this organization, the Veterans Administration?  Politicians.  More specifically, a politician who sat as the Chair of the Veterans Affairs committee from January 3, 2013, through January 3, 2015, and still sits as a member today?

Bernie celebrating his victory over Hillary Clinton.

Bernie celebrating his victory over Hillary Clinton.  (Ahem)

Bernie Sanders.  The politician that wants to expand the size of government, in order to expand its power – its power to say “no” to the people it’s supposed to represent.  The same politician who failed to oversee his own agency’s power to deny care.

But it’s not just veterans that fall before the power of “No”.  Medicaid and Medicare, both bright, shining examples of your government working for you (sort of), has a long and distinguished history of saying “no” to applicants, to people appealing decisions, and have gotten pretty good at saying “no”.

In fact, let’s take a look at the sweet KPIs HHS is compiling on appeals.  Looks like there might be one or two people out there unhappy with the one, single choice they have for health care, in Medicare (below).  For example, through FY2015, the average processing time for appeals decided (both for or against the person appealing) was 547.1 days.

That's a hot new trend in government service.

That’s a hot new trend in government service.

Now I’m no rocket surgeon, but a year and a half or so of waiting for the lumbering apparatus of those entrusted with tax dollars to disburse them to those who need them seems like, maybe, just a bit longer than is reasonable?  Especially if death is a more probable outcome if an issue goes untreated, thanks to your friends at HHS?  Especially considering those people on Medicare are typically retirees and the elderly?

So how does HHS measure itself against these appeals to power?  What do the results of these appeals look like – what are the outcomes? From the chart below, more than half are Unfavorable or Dismissed.  The power of “no” in action.

Kind of a "read 'em and weep" chart here.

Kind of a “read ’em and weep” chart here.

Even if one does receive a favorable appeal, there is one final, telling stat, the Average Processing Time.  A stat that if it was shown at a high enough leadership level internally in an organization other than one run by the USG, would result in one of the following:

  1. Firings of leadership.
  2. Money thrown at the problem to alleviate the downward trend and mediate loss of market share.
  3. Both #1 and #2.

Even if a favorable outcome is decided, the person appealing might have have outcomes other than favorable already.

As far as trends go, this is Not A Good One.

As far as trends go, this is Not A Good One.

Bernie Sanders, in order to fix what he thinks is wrong, wants the government to increase spending by 2X the current debt of the United States, or another 18 trillion in entitlements of one kind or another, but specifically in single-payer.  Given the examples above, and the power ceded to a government agency that can then tell you what you can’t have, how can Bernie argue on one hand that this is good for all Americans, while on the other, he’s removing choice from the equation?  How are people empowered when they have no choice?

Were veterans empowered while they sat on secret waiting lists for the care they deserved more than anyone else?  Or were they trapped in a

The Power of Choice - you're free to choose the one option.

The Power of Choice – you’re free to choose the one option.

system, one with no options, and left to suffer the consequences?

No.  If you can say no, that’s when you know you’re in charge.  Bernie wanted to be in charge of the biggest government apparatus in history, one with the largest and most expansive power, ever, to say “no”, and he effectively sold this idea to tens of millions of people.  The same politician who decided, on his own, that there are too many types of deodorant for sale, was telling everyone exactly what he thought of their power to choose.

Which begs the question:  Why let anyone make choices for you?

 

 

 

 

18 Trillion Oughta Do It

Bernie Sanders, a man whose entire existence has been funded by the earnings of people who work for a living, has famously proposed to spend even more of other peoples’ money, to the tune of $18 trillion or so, over the next 10 years.  This is in addition to what the USG is

In Bernie's mind, this is far too little spending. Wait. Did I say "mind"?

In Bernie’s mind, this is far too little spending. Wait. Did I say “mind”?

currently spending, which, as a percentage of GDP, is at WW2-era levels of spending, and last I saw, we weren’t driving Shermans through the Ardennes on the way to Berlin.  Call it an additional $1.8 trillion per year, over and above the 2015 benchmark spending level of $3.69 trillion per year.

A trillion here, a trillion there, pretty soon we’re talking serious money.

Well.  Where are all these massively underutilized dollars going to come from, anyway, so the federal government can correctly spend them for us?  Is $18 trillion sitting under a really large number of mattresses?

As it turns out, the answer to the mattress question is “No”, and even an economic simple Simon like Sanders (apologies to Simons everywhere, simple or otherwise, excluding an apology to Sanders) can look at the data and understand that, but he doesn’t want to.  Why?  Because he doesn’t have to, that’s why – he can easily peddle “free” to people who still believe in such things as, well, things not having a cost, to them or others, because there’s never a shortage of people who will line up for something they did not earn.

Bernie’s selling point is that The Rich ™ can and will pay for it, a canard that has been used by such other lovely humanitarians like Lenin and Mao, whose actions resulted in the deaths of tens of millions.  But instead of pointing out history to a reality denier like Sanders, let’s look at the actual income paid into the IRS at all income levels, and see what’s actually there to be taxed.  All data courtesy of the IRS.

In 2013, the modified taxable personal income total was $6.4 trillion.  Total taxes generated were $1.265 trillion.  But take a look at where the Taxable Incomes and taxes paid 2013 v2bulk of those tax revenues came from – they came directly from the middle class, not the “rich”.  Any plan of Sanders that involves increasing taxes to pay for additional spending will come directly out of middle-income pockets.

Why?  Because the “rich” often don’t earn a salary, they earn income off investments, which is taxed at a different rate, and is money actually risked in the economy.  Secondly, if someone has a million dollar home, they might be considered rich in assets, but you can’t install an ATM on the side of your house to give you cash from the asset on your way to the supermarket.  That asset can be converted to dollars (through a loan against the asset) or sold, but it’s not income that can be taxed.

In fact as a percentage of total taxes paid, the $100,000 to $200,000 bracket bears the biggest federal income tax smack of anybody.  Now, in Sanders’ world, $200,000 might sound like a “rich” person, but a married couple earning $75,000 apiece, for $150,000 in total household income, would probably not be perceived as rich by anyone who knows what a mortgage payment on a simple $200,000 home is, and if a child comes along, well, those incomes start looking even smaller.

The income brackets from $50,000 through $500,000 constitute 66% of all income taxes collected.  These brackets are the ones that are currently the hardest hit in terms of tax burden.  It’s where the potential income is to be taxed in the first place.

Soak the middle! Er, the rich!

Soak the middle! Er, the rich!

So anything Sanders proposes in terms of new taxes will be disproportionately burdened on the very families he preaches he’s going to take care of.

Where would Sanders get that additional $1.8 trillion of annual spending?  In order to generate that additional $1.8 from the $50K-$500K brackets, he would have to double the effective income tax rate.  Double it.  Raise your hand if you’ve seen Bernie mention doubling the middle-class income tax rates.

Now, Bernie wants a blend of additional tax increases and revenues, so it would not fall entirely on the middle-class, but since income taxes constitute about half the USG’s tax revenues, that’s where the biggest hit will have to come from.  It’s not a choice.

But to make it worse, half the country pays no net income taxes.  Yet they get to vote in the economic duferati like Bernie Sanders, who has promised to give that half something for nothing, again, and has ridden that mantra all the way through Iowa.  Greed sells, it seems, but only Bernie seems to think it’s corporations that are greedy.  When the people who are apparently not too busy to be working at an actual job rush out to see him on the campaign

Or the true cost of dependency, but go Bernie!

Or the true cost of dependency, but go Bernie!

trail, waving “Free College!” signs, it’s fair to ask:  Who’s the greedy one here?

Bernie’s Economic Babbling: Trotsky Style!

Bernie Sanders, Brooklynite-In-Exile in Vermont, has a long series of errors on his campaign website, mostly related to economics.

And you can start thanking Bernie now by voting in 2016!

And you can start thanking Bernie now by voting in 2016!

It’s unclear as to whether or not anyone in Bernie’s camp has had the time to point out the stupidity of these errors, so as a service to the aging comrade, I’ll do that work for him.  Because he seems almost purposefully incapable of understanding the errors himself.

Where to begin?  Oh, inequality, of course, because if big government was created to do one thing, it’s to assure the right to life, liberty….oh, wait.   It’s to make everything equal for everybody.  Got it.  To wit:

  1.  Today, we live in the richest country in the history of the world, but that reality means little because much of that wealth is controlled
Bernie charts: We tell almost half the story!

Bernie charts: We tell almost half the story!

by a tiny handful of individuals.

The issue of wealth and income inequality is the great moral issue of our time, it is the great economic issue of our time, and it is the great political issue of our time.

Well, actually, we’re not the richest country in the history of the world, depending on how you measure it.  In fact, by GDP on a per-person basis, the US ranges from 10th to 14th in several versions of this metric.  Since Bernie loves to separate the classes by income, he’s already missing the point, and making a mistake – we’re not the richest country in the world by standard comparative metrics.  If one family makes $200,000 per year with 5 people in the house ($40K/person), and a second family makes $100,000 per year with 2 people in the house ($50K/person), the first family is “richer” in aggregate, but on a per-person basis they’re poorer. And they likely have much larger expenses than the 2-person family.

Having the biggest pile of money in your house (or your country) doesn’t mean you’re rich.  Especially if you consider that unfunded liabilities like Social Security and Medicare are over $100 trillion dollars.

2.  The reality is that since the mid-1980s there has been an enormous transfer of wealth from the middle class and the poor to the wealthiest people in this country. That is the Robin Hood principle in reverse. That is unacceptable and that has got to change.

Thieves! Well, not really.

Thieves! Well, not really.

 

Here Bernie seems to miss the point entirely about wealth creation, and that the wealth “pie” is not a finite box of dollars, and the wealthy have somehow been sneaking in at night to take money out of the middle-class’s wallets without their knowing about it.  The dollars aren’t “transferring” from the middle-class to the 1%.  The economy has grown larger, and with it, incomes.  In fact, middle-incomes have grown in that same timeline, but so have incomes at the upper levels, just at a faster rate.

But massive and historically unprecedented increases in federal entitlement spending haven’t increased incomes.  In fact, incomes dropped,

Hmm - the govt spends more, yet people earn less? That's un-possible!

Hmm – the govt spends more, yet people earn less? That’s un-possible!

even prior to the federal spending expansion.  Why?  Because when you encourage people not to work, by providing enough support through entitlements so you don’t have to work, you will see a massive reduction in the workforce.

In this scenario, if the government is providing enough income to live without working, then whatever capital is owned and invested, risked in the marketplace, will inevitably grow larger as a larger share of a growing economy.  So those who work and invest will inevitably have more than those who choose not to.  Is it “fair” that I work two jobs at 60 hours per week to earn more income, only to have those additional hours be taxed at a higher rate because I then make too much money, as deemed by a politician who gets paid off the sweat of my labor?

So people leave the workforce and incomes drop? Shocking.

So people leave the workforce and incomes drop? Shocking.

The other piece Bernie seems to so easily forget is that money invested is money risked, which is something he never asks his followers to do – risk their own time, their own money, and their own futures, on investing in an idea, a stock, a project, that might pay dividends somewhere down the line.  Instead, he wants to take earnings from those who will willing to take risks, and be successful through hard work, and give it to those who risk nothing other than a mild hand-cramp when automatically pulling voting levers for people like Bernie who have sold them a bill of class warfare goods, and want to be paid for it, in votes, every few years.

There is something profoundly wrong when the top one-tenth of one percent owns almost as much wealth as the bottom 90 percent.

What’s wrong?  If you’re poor, and extremely poor, then obviously you’re not going to own a lot of assets.  It’s very likely that you own much less than zero assets, and are receiving entitlements of one kind or another, which would make you a net negative wealth “owner”.

In case Bernie missed it – half the country pays no net income taxes.  That’s the bottom of the bottom 90%.  Secondly, the top 50% of income earners pay 97% of all income taxes collected.  That means the biggest earners carried the biggest burden of wealth transferred since the history of these efforts has been kept.  We live in record-setting times, in that wealth is being transferred from the productive sector to the non-productive sector at larger and larger rates, every year.

There is something profoundly wrong when 58 percent of all new income since the Wall Street crash has gone to the top one percent.  

You can't win if you don't play.

You can’t win if you don’t play.

Actually, it makes complete sense that new income goes to those who risk their own money in the markets.  Would Bernie expect people to risk their money in order to earn less money?  Take a look at the labor force participation rate, Bernie – it’s gone down, dramatically, as people have shifted to consuming available entitlements.  Then Bernie complains that those who shifted to getting something from the government don’t earn as much as people who work for a living?  Really?  That’s like complaining about dinner without paying for the ingredients, and not making dinner.  See how that flies at the dinner table in your own home.

 

How’s re-distribution working out, historically?  Not so well.

People make less when the government takes in more tax dollars? Gasp! I repeat: Gasp!

People make less when the government takes in more tax dollars? Gasp! I repeat: Gasp!

In fact, the more money the government spends, the lower median incomes are.

Hm.  I wonder why?  The facts seem to fly in the fact of Bernie’s claim that the more government spends, the better off its citizens are.  The facts show that the opposite is true.  If taxes increase, and federal income goes up, how would those dollars translate, even on a one for one basis, to people earning the median incomes?  They’re working, so they don’t receive direct federal assistance.  In fact, you can make the claim that raising taxes, even on the wealthy alone (which won’t, in fact, be enough to cover annual federal expenditures), would have the opposite effect of increasing incomes – because you will have placed an increased tax burden on those earning the incomes in the first place.

As has been demonstrated, you would have to start raising the federal tax rate on middle-class earners in order to support any additional federal spending.  There just isn’t enough income lying around the country to feed the yawning chasm that is the federal maw, one that Bernie wants to continue to feed in order to keep his cushy lifestyle telling workers how much of their money he needs to re-distribute to buy votes.

Finally, Bernie tries conflating two things, on two different timelines, and tries to call that an argument:

Despite huge advancements in technology and productivity, millions of Americans are working longer hours for lower wages. The real median income of male workers is $783 less than it was 42 years ago; while the real median income of female workers is over $1,300 less than it was in 2007. That is unacceptable and that has got to change.

First, median household income, even inflation adjusted, has increased by $5,000 from 1976 to 2012.  This includes a massive increase in the labor force by women that began in the 1970’s and is still increasing today.  So no, median incomes aren’t decreasing, they are increasing.

Secondly, for female workers, Bernie chooses 2007 as a comparison, which was the highest female rate of earnings, ever.  He doesn’t go

Hey look! Women earn less now than their peak in 2007 - but more than they did in 2000! Now explain to me how that's bad, again?

Hey look! Women earn less now than their peak in 2007 – but more than they did in 2000! Now explain to me how that’s bad, again?

back 42 years for this metric, does he?  No, because he wants it to look worse than it is – but it’s going to look bad, regardless, due to the recession.  Incomes generally don’t go up much during recessions, but both male and female earnings did, after the bottoming-out of the recession trough.

Male earners followed the exact same pattern – their earnings dropped in the same fashion.  Why?  Because recession.

Did the increase in federal spending (as shown above) increase incomes?  No, because people who work for a living are rarely in line waiting for a handout.  So that wealth transfer has only a negative impact on them, via tax increases.

Finally, how would raising taxes, on the wealthy, on corporations, or anybody, increase incomes?  History has shown that incomes have actually decreased while federal spending increased, so why would even the simplest of dullards double down on a demonstrably losing bet?

Answer:  Because Bernie is not in it for incomes.  He’s in it for power, and for filling the empty spot where his soul used to be, before he sold it

This is Bernie's idealized world.

This is Bernie’s idealized world.

to a class warfare paradigm in order to live a life he could never have earned on his own dime.  He can only enjoy his lifestyle off the earnings, the work, of others.  A lifestyle, as Bernie should know, is what caused the Russian revolution in the first place, and put its 20th-century

heroes into power – and caused the deaths of 100 million people in the 20th century.

But hey – let’s raise taxes!

 

 

 

 

 

 

Bernie Sanders: Federal Spending Hawk

In a shocking turn of events, Sen. Barry, er, Bernie Sanders (current whereabouts unknown, but might be found in a server storage facility at DNC headquarters, or apologizing spasmodically at the last debate to his Probably Pantsuit Overlord) recently decided that he opposes federal spending!  In the interests of saving digital space, I omitted any additional exclamation marks at the end of the previous sentence.

Bernie has taken this bold stance as a result of the House and Senate passing the omnibus spending bill, just in under the wire to continue funding the federal government, and just a few weeks from the New Year:

The Senate voted overwhelmingly Friday in favor a $1.8 trillion package of spending bills and tax breaks, sending the legislation to President Obama’s desk for his signature.

(As an aside, out in the real world, if you’re finally getting around to authorizing your next year spend two weeks before it starts, you get fired.)

Bernie’s response to this record-setting spend?  Billionaires are evil.  Insert shocked meme here.

I guess I'm shocked he's still peddling this idea.

I guess I’m shocked he’s still peddling this idea.

Millions of Americans are unemployed and working longer hours for lower wages, yet this spending package gives more tax breaks to billionaires, encourages large corporations to ship jobs overseas and makes worse an already corrupt campaign finance system.

First of all, unemployed Americans are not going to become more employed by doing the opposite of what Bernie’s complaining about here – raising taxes will reduce employment, as more money flows to the federal, state, and local governments rather than being invested in businesses, which leads to hiring.  The fact that federal spending has exploded in the last 8 years (with Bernie cheering the way on much of that increase in spending) while employment and incomes have remained stagnant seems to escape the reality of a man who’s literally fed himself off the labor of other people.  Taking money from the productive sector of the economy will in no way create a job.

Government spends more, incomes stay flat. Another economics lesson that Bernie hasn't bothered to wrap his receding hairstyle around.

Government spends more, income drop or stay flat. Another economics lesson that Bernie hasn’t bothered to wrap his receding hairstyle around.  That’s a *doubling* of federal expenditures in 15 years.  Federal spending does not improve incomes.  Period.

Oh, and “shipping jobs overseas”?  Don’t worry about the budget or spending bills, Bernie – our corporate tax rate is enough to do that as it is.  And since Bernie loves to tout European countries as being more progressive than the knuckle-draggers here in the states, maybe he can explain why, say, Sweden has a lower corporate tax rate than the United States?  In fact, why does the US have the highest rate out of all these countries?  Are those countries also shipping jobs overseas?  I guarantee that they’re not shipping them to the US with a higher corporate tax bite.

Can't wait for Bernie's platform to call for European-level corporate tax rates. How long will I have to wait for that to come out of Bernie's mouth?

Can’t wait for Bernie’s platform to call for European-level corporate tax rates. How long will I have to wait for that to come out of Bernie’s mouth?

Oh, and as for corruption in campaign finance – who are some of Bernie’s biggest campaign contributors?  Public-sector employees.  So tax dollars collected from the private sector are paid to those employees, a portion of which is also paid to their union, then the union lobbies Congress – and Bernie Sanders – to increase their rates of pay and benefits.  It’s a circular kickback scheme.

Yes, by all means - let's end campaign contribution corruption, starting with unions.

Yes, by all means – let’s end campaign contribution corruption, starting with unions.

Still, Bernie is by no means finished; he’s still going to take a swing at industries that produce that hated result – jobs:

Scientists tell us that we must act immediately to combat climate change, but this bill will lift the crude oil export ban and encourage the burning of more fossil fuels.

Scientists also tell us that climate change is directly correlated to solar activity, and that the cooling period that’s occurring now (prompting a change from the “global warming” nomenclature to “climate change”) is part of normal solar activity.  Scientists also tell us that smoking tobacco will kill us, yet Congress hasn’t banned tobacco.  Or banned cancer.  What’s Bernie waiting for?

Now, lest we forget the children, Bernie reminds us how evil Republicans are, again, in case anyone’s missed his earlier messaging on this issue:

And 16 million children are living in poverty in this country, but Congress has decided to cut food and nutrition services for our most vulnerable and increase the already bloated defense budget.

Yes, but by the measures used to define “poverty”, Bernie ignores the one trillion or so spent annually in the US on welfare programs, of all kinds.  From the article:

The government’s own data show that the actual living conditions of the more than 45 million people who are deemed “poor” by the Census Bureau differ greatly from popular conceptions of poverty.[18] Consider these facts taken from various government reports:[19]

  • Eighty percent of poor households have air conditioning. By contrast, at the beginning of the War on Poverty, only about 12 percent of the entire U.S. population enjoyed air conditioning.
  • Nearly three-quarters have a car or truck; 31 percent have two or more cars or trucks.[20]
  • Nearly two-thirds have cable or satellite television.
  • Half have a personal computer; one in seven has two or more computers.
  • More than half of poor families with children have a video game system such as an Xbox or PlayStation.
  • Forty-three percent have Internet access.
  • Forty percent have a wide-screen plasma or LCD TV.
  • A quarter have a digital video recorder system such as a TIVO.

Only in Bernie’s America do poor people have 2 cars and a plasma TV, and get to be categorized as “poor”.  Since the War on Poverty began,  $19.8 trillion has been spent on it – triple the total spent on military wars for the entire history of the US.

Since the beginning of the War on Poverty, government has spent $19.8 trillion (in inflation-adjusted 2011 dollars) on means-tested welfare. In comparison, the cost of all military wars in U.S. history from the Revolutionary War through the current war in Afghanistan has been $6.98 trillion (in inflation-adjusted 2011 dollars).[3] The War on Poverty has cost three times as much as all other wars combined.

But Bernie complaints continue:

While there are some important and positive provisions in this bill like the expanded Earned Income Tax Credit and Child Tax Credit, the truth is we cannot afford another spending package that expands the power and wealth of the billionaire class at the expense of everyone else. Congress must pass legislation that make our rigged political and economic systems work once again for the vast majority of Americans not just the 1 percent.

As Bernie fails to note, again and again, is that the 1 percent, the 10 percent, the 50 percent – those are the only people in the country paying taxes.  So if you’re going to create tax incentives or cut rates, it will of course impact the people actually paying the taxes, not the net recipients of those taxes collected.

If the 1% are so powerful, why are they the ones always stuck with paying the bills?

And to keep Bernie somewhere in the vicinity of Honesty, USA, the top 10% of income earners in the US pay 68% of taxes.  The top 50% of taxpayers pay 97% of all income taxes collected.

I guess coughing up 6-7 times your earnings in taxes paid relative to everyone else isn't enough in BernieLand.

I guess coughing up 6-7 times your earnings in taxes paid relative to everyone else isn’t enough in BernieLand.

If there’s something unfair in that tax scheme, it’s that half the country has almost no skin in the game whatsoever in paying taxes – so of

In his defense, though, it's not like it's *his* money.

In his defense, though, it’s not like it’s *his* money.

course they’re going to vote for tax increases on the wealthy, because it nets them more government stuff.

And that, in its entirety, is why Bernie Sanders is a presidential candidate.  His supporters’ votes have been bought and paid for by the 1% he so routinely demonizes.

Bernie Sanders: Wrong On Everything

Just because you surge in the polls doesn’t make you right, which means, I’m sorry to say, that what Bernie regularly posts on his taxpayer-

Yeah, ok, but he really knows what to do with the money.

Yeah, ok, but he really knows what to do with the money.

funded Senate site is filled with the wrong ideas, the wrong policies, and the wrong fixes to problems that would not have been wrought had the government not intervened in the first place.

Oh, and in case Bernie’s supporters want to tout his lead in the laughable Democratic race for the nomination:  Bernie is competing against someone with more baggage than the 3rd-largest airline in the US.  And on the Republican side, Trump is still holding a lead in many polls.  So let’s hope Bernie’s supporters don’t count their allocated, government-issued Freedom Chickens before they hatch.

Since Bernie’s site is “dynamic”, a quick snap of the page, as I expect it to change and be filled with other topics such as “Sanders Questions Need for Soldiers to Have Ammo” and “Sanders Quiet on Vets Dying in VA Hospitals While He Was On the Senate Veterans Affairs Oversight Committee”.

Sanders: How I'm Wrong In Eleven Easy-to-Read Articles

Sanders: How I’m Wrong In Eleven Easy-to-Read Articles

Let’s start with jobs, since unlike a lot of Sanders supporters, most Americans want to work for a living.  What’s Big Bernie’s take on jobs?

Easy.  Let’s ban energy production in the US!

11.4:  Sanders, Merkley, Leahy Introduce Bill to Ban New Drilling on Public Land

WASHINGTON, Nov. 4 – Sen. Bernie Sanders (I-Vt.), Sen. Jeff Merkley (D-Ore.) and Sen. Patrick Leahy (D-Vt.) introduced legislation today to help accelerate the transition to clean energy by ending all new federal leases for oil, gas or coal extraction on public lands and waters.

As others have noted, since the Obama administration has already drastically reduced the leasing of public lands for commercial oil drilling, to a 3-decade low, what, exactly, does Bernie expect to accomplish?  Other than make it harder and more expensive, in the long run, for people who work for a living to put gas in their cars?

Here’s where Bernie really sticks it to those evil energy-producers:

“Worry less about your campaign contributions and worry more about your children and grandchildren,” Sanders told Republicans who continue to deny the science on climate change. “We are taking on the Koch brothers and some of the most powerful political forces in the world who are more concerned with short-term profits than the future of the planet. I’ve got four kids, and I’ve got seven beautiful grandchildren. We have a moral responsibility to leave our kids a planet that is healthy and inhabitable.”

Sanders doesn’t, however, apparently want to leave them a planet where when they turn on the light switch a light comes on.  First of all, there is no “clean” energy.  A wind turbine isn’t made from daisies and cow dung.  It’s made from steel, carbon, and many are routinely backed up by gas-fired energy when the wind doesn’t blow.  You need a gazillion of them to even hope to start matching current energy demands.

Also, Sanders seems to avoid mentioning those companies with their hands out for federal dollars that seek short-term profits rather than the future of the planet.  I guess not everyone is as saintly as Bernie when it comes to what power they choose to consume on a daily basis.

Look at that great federal solution that satisfies future energy needs, cleanly!

Look at that great federal solution that satisfies future energy needs, cleanly!

Oh, and since the national infrastructure won’t be divested of cars anytime soon, Bernie creates more dependency on Middle East oil – which is something no “leader” in American politics should be supporting.  Ever.

And how does restricting oil/gas drilling in the US help out those middle-class people who want a job, say, working for a company that drills for oil?

But enough about Americans wanting to do the jobs the government won’t let them do.  Let’s cut defense spending!

11.10:  Sanders Votes Against Increasing Defense Spending

Not three days before the Paris massacre, the ever-reliable Bernie Sanders took out his favorite whipping boy, and whipped him, just days before yet another massacre perpetrated by the insane might, just might, mean we shouldn’t be cutting defense spending even lower than it has been under Obama.

Timing, as always, is irrelevant when the dictatorship of the proletariat must be overthrown to make way for the pan-utopian Socialist future that awaits us, or whatever garbage is being peddled by Sanders and the mindless ilk that support an ideology responsible for 100 million deaths in the 20th century.

“If we are serious about ending waste, fraud, abuse and excessive spending, we have got to focus on all agencies – including the Department of Defense.”

Although Bernie fails to mention even one other agency that he wants to take a look at.  Like the Department of Energy, maybe?  Or maybe entitlements as a whole?  Nope.

But hey, are we really entitled to a defense here?

But hey, are we really entitled to a defense here?

“This bloated Pentagon budget continues to pour money into outdated weapons systems that don’t function properly.”

The bloated Senate payroll continues to pour money into outdated anachronisms that don’t function properly, but Bernie still takes his paycheck.

Oh, and the outdated systems?  They’re outdated because new systems won’t be authorized by Barack Obama’s signature on the budget.  Secondly, if by “don’t function probably” Bernie means “able to strike with unmatched power anywhere in the world”, then he might be slightly confused about what the word “function” means.  Granted, he was barely an apprentice carpenter four decades ago, so what does he know about the design and function of weapons systems?  Other than that they don’t fire low-information votes into the ballot box for him?

“The Department of Defense is the only federal agency that cannot pass a clean audit.”

The Fed isn’t audited and 40% of every dollar spent, under budgets Bernie votes for, is paid for by borrowed funds.  Secondly, apparently Bernie’s never heard of DCAA (Defense Contract Audit Agency) and DCMA (Defense Contract Management Agency), two huuuuuuuge federal agencies that audit all DoD contracts, and if defense contractors fail the audit or have anything wrong in their estimates, the contractors are fined, and they eat the cost overruns if necessary.

Does Bernie know what an audit actually is?  Does Bernie know his budgets include funding these two agencies?

“Many of its major acquisition programs suffer from chronic cost overruns.”

As does nearly every government contract.  Bernie is silent on the Obamacare website’s cost overruns.  Why isn’t he crying out for an audit of HHS?  Nearly a trillion dollars spent on a website.  One.  Trillion.  Dollars.   That’s huuuuuuge money.  Did that “work properly”?  But hey, it’s health care, so whatever.

“Virtually every defense contractor has been found guilty or has reached a settlement with the government because of fraudulent and illegal activities. This has got to change.”

This is an enormous accusation, since the DFAR is so complex it is virtually impossible not to screw something up in terms of meeting the massive and frequently conflicting regulatory requirements.  So “settlements” are often small and routine fines for failure to comply with the DFAR.

And considering there are thousands of defense contractors and sub-contractors, Bernie is claiming that the hard-working Americans that work for these firms, and some of them are small, family-owned machining shops, are actively seeking to commit fraud.  Does any business model start with “How can we defraud the US Government”?

What Bernie really wants is the DoD budget to be spent on entitlements, not defense.  He figures there are more retired people than people working in the defense industry, and he can count votes.  It’s that simple.

And, finally, after trashing the Department that employed them, Bernie has a tribute to veterans. No word yet as to which side of his mouth he’s delivering this message from:

11.11:  Sanders Statement on Veterans Day

“Today, we honor the sacrifice of our nation’s veterans and their families. The truth is that we can never repay the debt that we owe to those men and women who put their lives on the line to defend our country. Our commitment to care for our veterans must extend to every day of the year – not just Veterans Day. We have a moral obligation to keep our promise to provide for the wounded and their families and ensure that all veterans receive every benefit they have earned and deserve.”

Oh, and look at how Captain Oversight honored veterans – by ignoring the facts of the outrages occurring in  VA hospitals that were plainly available to him.  Bernie was Chairman of the Senate Committee on Veterans’ Affairs (2013 – 2015).  This occurred on his watch.

Bernie has all the qualities one looks for in a leader:  Hubris, an amazing ability to ignore innate contradictions in his policy positions, and

Hey, who needs consistency when you've got Marx behind you?

Hey, who needs consistency when you’ve got Marx behind you?

an uncanny ability to ignore the deaths that he had the power and responsibility to prevent.  He doubles down on these massive, apoplexy-inducing failures, by now making trite statements regarding the sanctity of veterans on his website.

These are just a few samplings of how wrong Bernie is, but with a full head of steam (and taxpayer dollars, and “big” union dollars behind him), it’s hard to keep up with the Most Disingenuous Man In The World.

 

 

 

 

 

 

Gleaming The Bern

If there’s one thing Bernie Sanders knows, is that when the going gets tough, the tough – or in this case, the Bernie – simply doubles down on

We would be wise to listen to The Slater.

We would be wise to listen to The Slater.

the stupid, and goes even further into the Realm of the Unbelievably Economically Illiterate.

In his most recent iteration of this Bernie Behavior ™, he uncorked the idea of spending another $18 trillion on new, um, spending – in addition to the record spending, deficits, and debt we’ve already enjoyed under Barack “Deficit spending is unpatriotic unless I’m the one doing it” Obama.  Because the last stimulus worked out so well.  ($650 million for Digital-to-analog television converter box program?)

Bernie’s taxpayer-funded meme generator has this graphic all over the internet of late, and it would be hilarious in its unintended comedy if it weren’t also hideously obscene in what it means to promulgate, much less support, this level of lunacy:

Why not make it 36 trillion?

If it’s such a great idea, why not make it 36 trillion?

But let’s take Bernie one disaster at a time.  It’s the only way I can get through it.

1.  Medicare for All – $15 trillion

First of all, covering everyone under Medicare means that what’s currently happening with Medicare – that the true costs of care are shifted onto commercial rate-payers – means that an entire system of payments that don’t cover hospital or provider costs results in hospitals and providers that will have to cut back on the care they can offer.  In other words, by covering everyone with the same plan, you actually decrease access to care.  You can’t ignore costs of providing care by only looking at what you’re willing to pay.  Try that at an auto mechanic’s shop and see how that works out for you.

Note that this has been happening for years now under Medicare, and is also happening now, as predicted, with the other aspects of centralized health care, in that Obamacare co-ops are folding like the cheap financial tents they are.  In what should come as a surprise to

Oh, so I've got at least through the next few weekends not to worry about this consuming 100% of my paycheck? Cool.

Oh, so I’ve got at least through the next few weekends not to worry about this consuming 100% of my paycheck? Cool.

Bernie, wishing things to be true does not make them so, so quadrupling down on Medicare is like stomping on the accelerator after you realize you’re headed for a cliff.

Oh, and where’s that $15 trillion going to come from?

2.  Social Security – $1.2 trillion

Touted as a way to increase benefits and shore up its looming insolvency – a pairing of phrases that should give even a 6th-grader mathematical pause – Bernie figures why not throw a big money bomb at the problem and hope it goes away.

First, let’s do a little envelope math here:  $1.2 trillion of $13.4 trillion in unfunded liabilities (as of 2014) is 9% of the total unfunded liability.  That’s not even a dent in it.  It’s not even a scratch.

Worse, the unfunded obligation seems to go up by that same $1.2 trillion amount – annually:

Social Security ran a $71 billion deficit in 2013, closing out four years of consecutive cash-flow deficits as the program’s unfunded obligations continue to grow.[1]According to the 2014 annual report from the programs’ trustees, the combined 75-year unfunded obligation of the Social Security and Disability Insurance Trust Funds (referred to collectively as the OASDI Trust Fund) is $13.4 trillion, a $1.1 trillion increase from last year’s unfunded obligation of $12.3 trillion.[2]

So the spend won’t even touch the unfunded liability, only changing the benefits and raising the retirement age will do that.  Which is not on Bernie’s table of offerings here to “fix” the problem.

Oh, and where’s that $1.2 trillion going to come from?

3.  Rebuild roads, bridges, and airports:  $1.0 trillion

Apparently the existing (near) $1 trillion “stimulus” wasn’t enough to rebuild our crumbling infrastructure, although, as reality kicked in on a massive spend of that scale, it turns out that the bulk of it went to nothing at all like rebuilding roads, bridges, and airports.  It was sold as a means to reduce unemployment, with guarantees of a return to a “new normal” U3 rate of 5% back in 2009 – and with tales of horrific unemployment if we didn’t spend a trillion now, immediately.

Which, as it turns out, had little to no effect on unemployment, as the prime driver for the unemployment rate decrease was people leaving the workforce, a good percentage of which were doing so under extended unemployment benefits and lax disability requirements for SSDI, which made it much easier to do nothing and get paid for it.  The stimulus has largely been classified as a bust, but Bernie wants more of the same.

Why?  Why would he want to do something that has been shown to fail, again and again?  That transferring wealth from one sector (the private) to the other (the public) does not necessarily result in a net positive?  Considering that the federal government scrapes off its operating costs, and that the dollars become political playthings for politicians to use to enhance re-election results, why would an aging Socialist believe that the state knows better than the individual what to spend a dollar on?

Because Socialism.  That’s why.

Oh, and where’s that $1.0 trillion going to come from?

4.  College affordability:  $750 billion

One of the reasons college tuition goes up 2x-3x the rate of inflation is because tuition is subsidized by our loving godparents, the federal government, under the guaranteed student loan program.  So now, spending what’s close to the 2009 “stimulus” total on colleges is going to do what, exactly?  Make colleges reduce their tuition rates?  Make students smarter?  Reduce loan debt by shifting the cost of what would have been the loan onto taxpayers, which, in effect, raises taxes on people most likely to be paying off their own student loans to pay for the schooling of current undergrads?

Even I can’t distill this lunacy into its purest form.  It’s like trying to gaze into a singularity.  I might glimpse it, once, but then I’d go insane.

As others have noted, repeatedly, if you make money available to pay for something, the price of it will go up to match the availability:

Federal student aid, whether in the form of grants or loans, is the main factor behind the runaway cost of higher education. As Cato Institute economist Neal McCluskey explained in an April 2012 article for U.S. World & News Report:

“The basic problem is simple: Give everyone $100 to pay for higher education and colleges will raise their prices by $100, negating the value of the aid. And inflation-adjusted aid–most of it federal–has certainly gone up, ballooning from $4,602 per undergraduate in 1990-91 to $12,455 in 2010-11.”

Bernie wants to increase this lunacy, which will only a) drive up the tuition prices, b) incentivize an even larger student loan debt, and c) make the problem he purports to solve worse by enabling the educational industry to happily raise its own spending on the backs of students, all under the guise of making education more “affordable” for all.

Oh, and where’s that $750 billion going to come from?

5.  Paid family and medical leave:  $319 billion

This is simply another labor cost in the form of regulatory requirements that, despite what it sounds like, in terms of a cute-and-fuzzy-who-could-argue-against-this statement, is just another cost of labor, like the Medicare deduction.  This is yet another way to fund a federal program that will net payments to those who choose to have a family (in part).  Which is essentially asking people who do not have children to help subsidize the costs of those who do, which is another form of federal re-distribution and policy-making hiding behind the fig leaf of health care.

In thinking about this purely in terms of benefits, the cost of this paycheck deduction would come directly out of gross pay for the individual, and/or the costs to the employer – but essentially those costs will be borne by the consumer that buys the product or service the company provides, resulting in less demand for that product or service as costs go up.

Which might mean some people get fired for having increased benefits.  Funny how wishing for something nice in one hand might leave you with something else less nice in the other hand.

So where, exactly, is that $319 billion going to come from?

6.  Bolster private pension funds:  $29 billion

Here’s a place to start:  Where’s the $29 billion going to come from?  Taxpayers?  And to what end?  The federal government is going to essentially give a grant to private pension funds to cover potential losses?  What could possibly go wrong here?

7.  (Yuuuuge) Youth Jobs Initiative:  $5.5 billion  

The real "stimulus".

The real “stimulus”.

1 million jobs for disadvantaged youth.  This price tag results in a $5,500 per person subsidy.

Sanders’s bill, which he introduced in a D.C. neighborhood with relatively high unemployment and crime rates, would send $5.5 billion to local and state governments to fund job-training programs. Much of the money would go to helping unemployed African Americans. Sanders suggested the investment could pay for itself if it keeps more young black men out of jail.

Sanders seems to be living in a dream world where a jobs program would magically return its investment if it kept more young black men out of jail.  It’s being done right now, in terms of spending, and that hasn’t seem to have done a thing in terms of minority unemployment rates, incarceration rates, or the future prospects of the disadvantaged.  In fact, $18 trillion has been spent on Great Society programs since the 1960’s, and how’s that working out?  In short:

The best thing we can say for the Great Society economic programs as a whole is that they amounted to a gigantic waste of the taxpayers’ money. Many, however, were worse than wastes; they actually caused harm.

Bernie’s fix for this problem?  Spend more.

And yes, I have to ask, once again:  Where is that $5.5 billion going to come from?

All that said, I can tell you where the money for Bernie’s spending won’t be coming from:  Bernie’s pockets.  He’ll just be making even more money if enough people vote for him for President.