The GOP has abandoned fiscal restraint. Brian Riedl writes:
Republican congressional leaders have announced a deal with Democrats to bust discretionary spending caps by nearly $300 billion over the next two years. Appropriations will rise by 13 percent this year. […]
GOP lawmakers claim to be merely reversing recent defense cuts that would otherwise push the Pentagon budget below 2.9 percent of GDP for the first time since the 1930s. The other $131 billion of the spending-cap increase is meant to bribe Senate Democrats not to filibuster the new defense spending.
Past deals to raise the spending caps were offset with (roughly) equal entitlement-spending savings. But this budget buster — by far the largest since the 2011 spending caps were enacted to prevent such deals — is not even close to being fully offset. It will go on the nation's credit card.
Even worse, leading Republicans such as Senator John McCain and House Armed Services Committee chairman Mac Thornberry have called on colleagues to repeal the Budget Control Act, the most successful spending-cut legislation in decades. Repealing the BCA spending caps would return Congress to the pre-2011 era — in which, on average, discretionary appropriations grew by 7 percent annually. […]
Cutting taxes by $200 billion per year was easy. But without spending restraint, no tax cuts can be sustained. Even before tax reform, the Congressional Budget Office projected that annual budget deficits would surpass $1 trillion within five years and reach $2 trillion a decade after that (double those levels if interest rates rise). Over the next 30 years, the CBO projects the national debt will grow from $20 trillion to $92 trillion, reaching 150 percent of GDP.
[Brian Riedl, "Republicans Begin a Spending Spree," National Review, February 9]
Worldwide economic freedom is at an all-time high. Reports The Heritage Foundation:
The world economy is "moderately free," with another rise in economic liberty leading to a sixth annual global increase, according to the editors of the 2018 Index of Economic Freedom, released today by The Heritage Foundation.
The world average score of 61.1 is the highest recorded in the 24-year history of the Index. The world average is more than three points higher than that recorded in the first edition of the Index in 1995. […]
The United States managed to halt its recent slide, recording a score of 75.7, more than half a point above its 2017 score (its lowest score in Index history). Ranked No. 18 globally, it remains "mostly free" and rose in the regional rankings, thanks in part to a 1.3-point decline in Chile's score, to become the second-freest economy in the Americas region (behind Canada, which dipped to 9th place globally). "The decade-long decline in America's economic freedom may have been halted," the editors write.
Hong Kong and Singapore each logged increases in their Index scores, finishing first and second in the rankings for the 24th consecutive year. Three other frequent top 10 finishers – New Zealand (3rd globally), Switzerland (4th) and the United Kingdom (8th) – also saw their scores rise, though not nearly as much as Ireland (6th), which saw a 3.7-point increase.
["2018 Index of Economic Freedom," The Heritage Foundation, February 2]
Were the corporate tax cuts just a giveaway to corporations? No, writes Gary Wolfram:
When the government levies a tax on corporations, that is not the end of the story. There are all kinds of other consequences. The tax will affect the return that corporate-sector industries make from producing, which will lead to less production.
Less production in the corporate sector will drive up the price of goods that consumers purchase from corporations. So the tax burden placed on corporations actually falls on consumers in the form of higher prices.
What's more, with less being produced in the corporate sector there is less need for labor, and when the demand for workers is reduced, wages will fall. Thus, some of the tax levied on corporations will be borne by workers. […]
If one simply looks at the direct effect, it does appear that the beneficiaries of the corporate income tax rate will be the corporations themselves. If one attempts to foresee the invisible results, however, the same economic effects outlined above will occur, but in reverse: The reduced costs of producing in the corporate sector will lead to greater output, lower prices for consumers, and increased wages for workers.
In 2012, a Tax Foundation survey of the economic journal literature found that every study published in the prior 15 years found taxes had negative effects on economic growth, and studies that distinguished between different types of taxes found that the corporate income tax had the largest negative effect.
[Gary Wolfram, "How Corporate Tax Cuts Benefit Consumers and the 'Little Guy'," The Daily Signal, February 9]
Proposed freedom of association reforms are a muddle. The higher education reforms in the PROSPER Act are a step forward for freedom of association, but they could be better, writes Neal McCluskey:
Public institutions—government institutions—must not hire or fire based on faith, or discriminate against speech on campus. Ultimately, legalized violence must not be brought to bear for or against people based on their faith or opinions. Similarly, public institutions must not tell students who choose to freely associate in clubs or groups whom they must let in or keep out to get institutional funding or access to space; that is government punishing or rewarding people based on their associations.
The federal government, in contrast, must not reward or punish private institutions over their rules on association or speech as long as when a student enters and pays her bill a college does not deceive her about its rules. The institution's rules, freely accepted by the student, are a part of free association, while deception is fraud. […]
[The PROSPER Act] correctly requires only public schools to allow religious groups to make their own decisions about who can join or become an officer. But protection, again, should extend to all associations.
Partial correctness also applies to the Act's handling of controversial speakers and free speech zones. It says colleges, regardless of type, only court trouble for restricting speech if they say they have one speech policy but in practice have one that is more constrictive. That is the right policy toward private institutions—it would only punish fraud—but for public colleges no speech curbs are acceptable.
The bill also gets things only half right when it comes to allowing students to join single-sex organizations such as sororities. It would prohibit schools from taking "adverse action" against students who join such organizations. The impetus for this, according to the Times, is unhappiness with Harvard for punishing students who are in such groups. PROSPER's provision should absolutely apply to public institutions, but not a private school like Harvard.
As McCluskey goes on to note, the ultimate freedom of association policy would be to stop compelling taxpayers to pay for higher education through subsidies—a policy that would allow colleges to set their own rules and students to choose the schools whose rules reflect their own values.
[Neal McCluskey, "Can We PROSPER and Be Free?" Cato Institute, February 9]
Is deregulation "simply a code word for letting big business cut corners at every else's expense"? Liberals from the 1970s would disagree. Matt Welch:
After televised hearings chaired by Democratic Sen. Ted Kennedy, based on academic spade-work by the liberal economist Alfred Kahn, featuring testimony from consumer advocate Ralph Nader, Carter in 1978 signed the death warrant for the Civil Aeronautics Board, thus breaking up the regulatory cartel that had kept the same four national airlines virtually unchallenged the previous four decades.
Thus began a federal assault on "price and entry" regulations, or rules that determine which companies can compete in a given industry and what they're allowed to charge.
Carter also lifted individual prohibitions, most notably (thanks to an amendment by California Democratic Sen. Alan Cranston) on brewing beer at home. Result? You're drinking it. There were fewer than 50 breweries in the United States when Carter deregulated basement beer-making; now there are more than 5,000. In two generations, America went from world laughingstock to leader in the production of tasty lagers and ales.
Such was Carter's conviction about deconstructing chunks of the administrative state that he dwelled on it at length in his only presidential debate with Reagan.
"I'm a Southerner, and I share the basic beliefs of my region [against] an excessive government intrusion into the private affairs of American citizens and also into the private affairs of the free enterprise system," he said. "We've been remarkably successful, with the help of a Democratic Congress. We have deregulated the air industry, the rail industry, the trucking industry, financial institutions. We're now working on the communications industry." […]
These insights from the Disco Era are sorely needed today, particularly on the state and local level, where much of the price-and-entry regulatory action takes place. In the '70s, around one job in every 10 required a government-enforced occupational license; now the ratio is closer to one in three.
[Matt Welch, "Democrats These Days Hate Deregulation, but Once Upon a Time They Loved It," Los Angeles Times, February 8]
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