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  • Trump’s Budget Paves the Road to Fiscal Failure

    Trump’s Budget Paves the Road to Fiscal Failure

    President Donald Trump has issued his preliminary federal budget proposal looking to the U.S. government’s next fiscal year. What it shows is that there will likely be no attempt to reduce the size and cost of most of the American interventionist-welfare state.

    On Thursday, March 16, 2017, the White House released, “America First: A Budget Blueprint to Make America Great Again.” Listening to the comments of some on the political left, you would think that the world was going to come to an end. For many on the political right, the programs placed on the chopping block for reduction or near elimination seem like a dream come true–if the budgetary proposals were to be implemented.

    Furthermore, the blueprint offers an insight into the mind of Donald Trump about the role of government in society. When the budget was released, Michael Mulvaney, the director of the Office of Management and Budget, said that this was Donald Trump’s fiscal vision for America. “If he said it on the campaign, it’s in the budget,” Mulvaney declared. “We wrote it using the president’s own words.”

    Same Entitlements, More Defense Spending


    Even a cursory look at President Trump’s budgetary proposals reveals that he plans to leave “entitlement programs” untouched while reallocating approximately 30 percent of the federal budget’s “discretionary” expenditures from one set of activities to another. Neither the total amount of government spending nor the likely budget deficit is threatened with meaningful reduction.

    In the current 2017 federal fiscal year, Social Security, Medicare, and related spending make up almost 64 percent of Uncle Sam’s expenditures. The net interest on the near $20 trillion national debt makes up another 7 percent of federal spending. Out of the remaining around 30 percent of the budget, defense spending absorbs 15 percent of federal outflows.

    The budget proposal makes it clear that President Trump is devoted to expanding military capabilities for continued foreign intervention. A foreign policy focused on “America First” is losing none of its global reach or the military hardware to back it up.

    During his March 17 press conference with visiting German Chancellor, Angela Merkel, Donald Trump reiterated that he was not a foreign policy isolationist. Indeed, he emphasized his allegiance to NATO and its role in Europe. At the same time, Secretary of State, Rex Tillerson, was at the demilitarized zone between North Korea and South Korea, declaring that nothing was off the table, including a preemptive military attack on North Korea’s nuclear capability.

    For conservatives and classical liberals who hope for foreign policy that leaves the United States less vulnerable to regional foreign conflicts, President Trump and his cabinet members are making it clear that America’s political and military allies must pick up more of the financial tab for the joint policing of different parts of the world.

    Reflecting this, the president’s blueprint proposes to increase Defense Department spending by $54 billion dollars, which would put military expenditures for 2018 at a total of $603 billion. The Department of Homeland Security would gain an additional $2.8 billion dollars for a total in 2018 of around $70 billion.

    The eyes and ears of the surveillance state will, also, remain intact and grow. The only wiretapping that President Trump seems to mind was an alleged eavesdropping on his own conversations before he took office. As for the rest of us, well, Big Brother is watching and listening–for our own good. After all, it’s all part of making America “great” and “safe” again.

    Cue Progressive Whining

    To pay for increases in the warfare state, President Trump’s budgetary axe has fallen on a variety of “discretionary” welfare and redistributive programs. To cover the $54 billion increase in defense spending, $54 billion is to be cut from half of the of the budgeted 30 percent discretionary spending. It’s worth keeping in mind that all the teeth gnashing by the left is over a less than 1.5 percent decrease to the projected $4 trillion (and then some) that Uncle Sam will spend in 2018.

    It must be admitted, conservative and classical liberal hearts can only be warmed by virtually every cut in this part of the budget. For example, Department of Agriculture spending will be reduced by 20.7 percent. However, it is worth observing that subsidies paid to farmers, including subsidies for not growing crops, are not on the chopping block. Trump does not want to antagonize a crucial part of rural Republican America that lives at the trough of government spending.

    On the other hand, the State Department and related foreign aid programs would be slashed by almost 29 percent. Not many tears need be shed here, given that State Department programs and personnel are at the heart of America’s misguided global social engineering schemes, and foreign aid is merely a slush fund for foreign political power lusters that undermine real market-oriented economic development in other parts of the world.

    This list goes on: Housing and Urban Development, down 12 percent; Health and Human Services, cut 16 percent; Commerce Department, reduced 16 percent; Education Department, decreased by over 13 percent (but with a shift of funds to increase falsely named “school choice” programs). The Interior Department is down almost 12 percent; the Labor Department cut nearly 21 percent.

    The Environmental Protection Agency would be cut by over 31 percent. The climate and land-use social engineers are being driven berserk by this one. It is being forecast as the end of planet Earth that swarms of regulatory locusts will be reined in from plaguing the country with their wetland rules, land-use restrictions, market-hampering prohibitions, and abridgments of private property rights. The heavens will darken, the seas will rise, and the land will be barren. How will humanity survive without self-righteous elitists leading mankind to socially-sensitive, greener pastures?

    O! The Humanities!

    Additionally, the National Endowment for the Arts, the National Endowment for the Humanities, the Institute for Museum and Library Services, and the Corporation for Public Broadcasting are targeted for a virtual 100 percent cut. Those concerned about the arts and humanities may have to put their private money where their mouths are.

    The thought that those who listen to the moralizing, collectivist voices on National Public Radio may have to pay for it (either out of their own pockets or from capitalist commercial interruptions) is just too much for these delicate souls to bear.

    Political pocket-pickers are warning that planned “Meals on Wheels” spending cuts threaten the poor and aged with starvation. But, in fact, 65 percent of the program’s funding comes from private donations or local and state governments, with only 35 percent funded by federal dollars. Furthermore, the day after the budget blueprint was released, the media reported that Meals on Wheels around the country received a more than 50 percent increase to their regular private donations rate. Private benevolence–amazingly!–materialized almost instantly to replace coercively collected funding with voluntary support for the charity that, apparently, many consider worthy of support.

    Leaving the Entitlement State Intact

    Donald Trump’s budgetary blueprint for American greatness needs to be put into the wider context. Where does this leave the size and scope of government in the United States?

    Alas, Trump’s budget leaves it seemingly untouched. The entitlement programs are feeding the insatiable growth of America’s domestic system of political paternalism: the governmental spending surrounding Social Security and Medicare redistribution.

    Under current legislation, their cost and intrusiveness will only get worse. In its January 2017 long-term federal government budgetary forecast, the Congressional Budget Office estimates that if nothing changes legislatively, the “entitlement” programs will end up consuming nearly 80 percent of all the taxes collected by the United States government.

    Since the remaining 20 percent of projected federal tax revenues will not sufficiently cover all projected defense and other “discretionary” spending, plus interest on the national debt between 2018 and 2027, the United States government will continue to run large annual budget deficits between now and then. This will add $10 trillion more to the total national debt over next decade.

    Donald Trump made it clear during the primary and general presidential election campaigns in 2016 that he considers Social Security and Medicare sacrosanct, not subject to the budget cutter’s chopping block. In addition, ObamaCare may be repealed, but the reform that Trump and the Republican leadership in Congress have in mind will still leave a heavy fiscal footprint. This, too, will maintain and entrench Uncle Sam’s intrusive presence in the healthcare and medical insurance business, and will, inescapably, cost a lot of government dollars, though the full estimates are still forthcoming.

    The Proposed Cuts Are Unlikely

    Keep in mind that Trump’s budgetary blueprint is merely his administration’s recommendation to Congress, and especially to the House of Representatives where spending legislation is constitutionally supposed to originate. Already the grumbling has begun to be heard, not only from the Democratic Party minority in Congress but from members of the Republican Party majority, as well.

    Abstract spending cuts almost always serve as good campaign rhetoric, especially for Republicans running for elected office, but like their Democratic Party counterparts, Republicans soon find themselves pressured and dependent upon the financial support of special interest groups, each of which feeds off of concrete government spending dollars.

    The resulting resistance to fiscal repeal and retrenchment turns out to be no different than with the groups surrounding the Democrats. Plus, the Republican foreign policy hawks have all the big-spending military contractors to serve in the name of warding off foreign threats to American greatness.

    At the end of the day, when the actual 2018 federal fiscal budget gets passed by Congress and signed by the president, it will no doubt contain fewer of the discretionary spending cuts than proposed in Trump’s blueprint. Other than adding whatever “repeal and reform” emerges out of the contest between ObamaCare and TrumpCare (or RyanCare), the “entitlement” portion of the federal government’s budget will remain untouched.

    Challenging the Entitlement Premises

    The fact is America is continuing to move in the long-run direction of fiscal unsustainability. The supposed untouchability of the “entitlement” segment of the federal budget will have to be made touchable. Nearly 90 years ago, in 1930, the famous “Austrian” economist, Ludwig von Mises, said to an audience of Viennese industrialists during an earlier economic crisis:

    Whenever there is talk about decreasing public expenditures, the advocates of this fiscal spending policy voice their objection, saying that most of the existing expenditures, as well as the increasing expenditures, are inevitable . . . What exactly does ‘inevitable’ mean in this context?

    That the expenditures are based on various laws that have been passed in the past is not an objection if the argument for eliminating these laws is based on their damaging effects on the economy. The metaphorical use of the term ‘inevitable’ is nothing but a haven in which to hide in the face of an inability to comprehend the seriousness of our situation. People do not want to accept that fact that the public budget has to be radically reduced.”

    If there is any chance of stopping, reversing and repealing the welfare state, the entitlement language in political discourse has to be challenged. “Entitlement” presumes a right to something by some in the society, which in the modern redistributive mindset equally presumes an obligation to others to provide it.

    It is essential to emphasize and explain the dollars and cents of the fiscal unsustainability of the entitlement society. And there are certainly a sufficient number of historical examples to point to for demonstration that the welfare state can go down the road to societal ruin.

    In addition, the entitlement mindset must be confronted with an articulate and reasoned defense of individual liberty, based on a philosophy of individual rights to life, liberty, and honestly acquired property. Plus, the ethics of liberty must be shown to be inseparable from the idea of peaceful and voluntary association among people in all facets of life, and that government’s role is to secure and protect such liberty and individual rights, not to abridge and violate them.

    If this is not done, and done successfully, the road to fiscal failure and paternalistic serfdom may be impossible from which to exit.


    Richard M. Ebeling

    Richard M. Ebeling is BB&T Distinguished Professor of Ethics and Free Enterprise Leadership at The Citadel in Charleston, South Carolina. He was president of the Foundation for Economic Education (FEE) from 2003 to 2008.

    This article was originally published on FEE.org. Read the original article.


  • Vault 7 Confirms, You’re Right to Be Paranoid

    Vault 7 Confirms, You’re Right to Be Paranoid

    On March 7, the transparency/disclosure activists at Wikileaks began releasing a series of documents titled “Vault 7.” According to the New York Times, Vault 7 consists of “thousands of pages describing sophisticated software tools and techniques used by the [US Central Intelligence Agency] to break into smartphones, computers and even Internet-connected televisions.”

    Stranger Than Fiction


    If the documents are authentic — and WikiLeaks has a sterling reputation when it comes to document authenticity — every paranoid thriller you’ve ever watched or read was too timid in describing a hypothetical Surveillance State. Even the telescreens and random audio bugs of George Orwell’s 1984 don’t come close to the reality of the CIA’s surveillance operations.

    In theory, the CIA doesn’t spy on Americans in America. In fact, digital traffic pays no heed to national borders, and the tools and tactics described have almost certainly been made available to, or independently developed by, other US surveillance agencies, not to mention foreign governments and non-government actors.

    Bottom line: You should accept the possibility that for the last several years anything you’ve done on, or in the presence of, a device that can connect to the Internet was observed, monitored, and archived as accessible data.

    Paranoid? Yes. But the paranoia is justified.

    Even if “they”  — the CIA, the NSA, the FBI, some random group of credit card thieves or voyeurs or whatever — aren’t out to get you in particular, they consider your personal privacy a technical obstacle to overcome, not a value to respect.

    All the Skeletons

    If you’ve got nothing to hide you’ve got nothing to fear? Everyone has something to hide. Somewhere, sometime, you’ve said or done something you regret or wouldn’t want the world to know. And you probably said or did it within a few feet of your smartphone, your laptop, or your Internet-connected television. Maybe nobody was listening or watching. Or maybe someone was. The only plausible conclusion from the Vault 7 disclosures is that you should assume the latter.

    Vault 7 confirms that as a State entity, the CIA answers to philosopher Anthony de Jasay’s description of the State as such. Just as a firm acts to maximize profits, the State and its arms act to maximize their own discretionary power. Even if it doesn’t do some particular thing, it requires the option, the ability to do that thing. It seeks omnipotence.

    The abuses of our privacy implied by the WikiLeaks dump aren’t an aberration. They’re the norm. They’re what government does.

    Reprinted from Libertarian Institute.


    Thomas Knapp

    Thomas L. Knapp, aka KN@PPSTER, is Director and Senior News Analyst at the William Lloyd Garrison Center for Libertarian Advocacy Journalism and publisher of Rational Review News Digest. He lives and works in north central Florida.

    This article was originally published on FEE.org. Read the original article.


  • Leftists Understand Economics When it Suits Them

    Leftists Understand Economics When it Suits Them

    What’s the right way to define good tax policy? There are several possible answers to that question, including the all-important observation that the goal should be to only collect the amount of revenue needed to finance the legitimate functions of government and not one penny above that amount.

    But what if we want a more targeted definition? A simple principle to shape our understanding of tax policy?

    I’m partial to what I wrote last year.

    the essential insight of supply-side economics…when you tax something, you get less of it.

    I’m not claiming this is my idea, by the way. It’s been around for a long time.

    Indeed, it’s rumored that Reagan shared a version of this wisdom.

    I don’t know if the Gipper actually said those exact words, but his grasp of tax policy was very impressive. And the changes he made led to very good results, even if folks on the left still refuse to believe the IRS data showing that Reagan’s lower tax rates on the rich generated more revenue.

    In any event, our friends on the nanny-state left actually understand this principle when it suits their purposes. They propose sugar taxes, soda taxes, carbon taxes, housing taxes, tanning taxes, tobacco taxes, and even “adult entertainment” taxes with the explicit goal of using the tax code to reduce the consumption of things they don’t like.

    I don’t like the idea of government trying to dictate what people do with their own money, but these so-called sin taxes generally are successful because supply-siders are right about taxes impacting incentives.

    The Belarusian Idleness Tax

    But that doesn’t mean it’s always popular when statist governments impose such policies. At least not in Belarus, according to a story from RFERL.

    Protests over a new tax aimed at reducing social welfare spread beyond the Belarusian capital, as thousands took to the streets in Homel and other towns. Along with similar protests two days earlier in Minsk, the February 19 demonstrations were some of the largest in the country in years. In Homel, near the border with Russia, at least 1,000 people marched and chanted slogans against the measure, known as the “Law Against Social Parasites.”

    But what are “social parasites” and what does the law do?

    …the law…requires people who were employed fewer than 183 days in a calendar year to pay a tax of about $200. …The measure is aimed at combating what President Alyaksandr Lukashenka has called “social parasitism.”

    For what it’s worth, the Washington Post reports that the government had to back down.

    The protesters won. On Thursday, Lukashenko announced that he won’t enforce the measure this year, though he’s not scrapping it. “We will not collect this money for 2016 from those who were meant to pay it,” he told the state news agency Belta. Those who have already paid will get a rebate if they get a job this year. The law, signed into effect in 2015, is reminiscent of Soviet-era crackdowns against the jobless, who undermined the state’s portrayal of a “workers’ paradise.”

    That’s good news.

    If people can somehow survive without working (assuming they’re not mooching off taxpayers, which is something that should be discouraged), more power to them. It’s not the life I would want, but it’s not the role of government to tax them if they don’t work. Or if they simply choose to work 182 days per year.

    Mr. Lukashenko should concentrate instead on taking the heavy foot of government off the neck of his people. According to the most-recent Index of Economic Freedom, Belarus is only ranked #104, with especially weak scores for “rule of law” and “open markets.”

    Given the low freedom ranking for Belarus, I suspect the real parasites in that country (just like in the U.S.) are the various interest groups that are feeding from the government trough.

    If Mr. Lukashenko turned his country into a Slavic version of Hong Kong with free markets and small government, people will be clamoring to work. But I’m not holding my breath expecting that to happen.

    P.S. While government shouldn’t tax people for not working, it’s also a bad idea to subsidize them for not working. Indeed, there’s even a version of the Laffer Curve for poverty and redistribution.

    P.P.S. On an amusing note, here’s the satirical British video on killing the poor instead of taxing them.

    Republished from International Liberty.


    Daniel J. Mitchell

    Daniel J. Mitchell is a senior fellow at the Cato Institute who specializes in fiscal policy, particularly tax reform, international tax competition, and the economic burden of government spending. He also serves on the editorial board of the Cayman Financial Review.

    This article was originally published on FEE.org. Read the original article.