An important component of the leftist class warfare agenda is to condemn President Bush's tax cuts for the rich. This claim is careless, ignorant or dishonest on at least two counts. First there's the constitutional issue. Article I, Section 8 reads, "The Congress shall have Power To lay and collect Taxes . . ." That means the president has no taxing authority.
Presidents can propose or veto taxes and Congress can override vetoes. The bottom line is that all taxing authority rests with the U.S. Congress. The next time you hear someone condemn or praise Bush's tax cuts, ask them whether the Constitution has been amended to give the president taxing authority.
But what about those tax cuts for the rich? Are the rich now sharing a smaller burden of the federal income tax because their fair share of the burden has been shifted to the poor? The most recent Internal Revenue Service (IRS) statistics can give us some guidance. In 2005, the top 1 percent of income earners, those with an annual adjusted gross income of $365,000 and higher, paid 39 percent of all federal income taxes; in 1999, they paid 36 percent.
In 2005, the top 5 percent of income earners, those having an adjusted gross income of $145,000 and higher, paid 60 percent of all federal taxes; in 1999, it was 55 percent. The top 10 percent, earning income over $103,000, paid 70 percent. The top 25 percent, with income of over $62,000, paid 86 percent, and the top 50 percent, earning $31,000 and higher, paid 97 percent of all federal taxes.
What about any argument suggesting that the burden of taxes have been shifted to the poor? The bottom 50 percent, earning $30,000 or less, paid 3 percent of total federal income taxes. In 1999, they paid 4 percent. Congressmen know all of this, but they attempt to hoodwink the average American who doesn't.
The fact that there are so many American earners who have little or no financial stake in our country poses a serious political problem. The Tax Foundation estimates that 41 percent of whites, 56 percent of blacks, 59 percent of American Indian and Aleut Eskimo and 40 percent Asian and Pacific Islanders had no 2004 federal income tax liability. The study concluded, "When all of the dependents of these income-producing households are counted, there are roughly 122 million Americans -- 44 percent of the U.S. population -- who are outside of the federal income tax system." These people represent a natural constituency for big-spending politicians. In other words, if you have little or no financial stake in America, what do you care about the cost of massive federal spending programs?
Similarly, what do you care about tax cuts if you're paying little or no taxes? In fact, you might be openly hostile toward tax cuts out of fear that they might lead to reductions in handout programs from which you benefit. Survey polls have confirmed this. According to The Harris Poll taken in June 2003, 51 percent of Democrats thought the tax cuts enacted by Congress were a bad thing while 16 percent of Republicans thought so. Among Democrats, 67 percent thought the tax cuts were unfair while 32 percent of Republicans thought so. When asked whether the $350 billion tax cut package will help your family finances, 59 percent of those surveyed said no and 35 percent said yes.
Whether you're for or against President Bush matters little, but what do you think of politicians and their media dupes winning you over with lies about the rich not paying their fair share? And, by the way, $145,000 or even $345,000 a year hardly qualifies one as rich. It's not even yacht money.
Wednesday, July 8, 2009
Government Deception About Government Finances by Walter Williams (April 8, 2009)
Most Americans accept the continuing attack on tobacco companies and smokers, but how do they feel about the massive government deception? In 1998, 46 state attorneys general and major tobacco companies signed the Master Settlement Agreement. The major tobacco companies agreed, among other things, to give states $240 billion over 25 years to provide for smoking cessation programs and cover the health costs associated with using their product. In return state attorneys general promised tobacco companies that they wouldn't sue them and would use their lawmaking power to protect the major tobacco companies from competition from small tobacco companies. Of the $80 billion extorted so far, states have spent about 30 percent on health, not all tobacco-related, and less than 6 percent on smoking cessation programs. Instead, state legislatures spent the bulk of their tobacco money for items such as museum building, tax relief, rainy-day funds and other expenditures having nothing to do with tobacco or health.
The U.S. Congress' deception was, and continues to be, a major player in our financial meltdown. In congressional hearings, before the meltdown, on the soundness of Fannie Mae and Freddie Mac, Rep. Maxine Waters said, "Through nearly a dozen hearings, we were frankly trying to fix something that wasn't broke. Mr. Chairman, we do not have a crisis at Freddie Mac, and particularly at Fannie Mae, under the outstanding leadership of Franklin Raines." Rep. Barney Frank, the ranking Democrat on the Financial Services Committee, said, "These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis. The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing." Other congressmen gave similar assurances. Unfortunately for our nation, the forces pushing for "affordable" housing won the day and saddled us with today's unprecedented financial disaster. How stupid is it of us to ask those who brought us "affordable" housing to now turn their attention to bringing us "affordable" health care?
Congressional deception about government finances means today's children will face a financial disaster that will make today's mess seem like a walk in the park. What's called the public debt stands at $11 trillion and growing. That pales in comparison to the federal government's unfunded liability -- obligations that are not covered by an asset of equal or greater value.
Mike Whalen, former policy chairman of the Dallas-based National Center for Policy Analysis, commenting on last year's Social Security Trustees annual report on the state of the Social Security and Medicare programs, said, "The report on the state of entitlement programs is rather grim -- the combined unfunded liabilities of both programs are $101 trillion." What that means is that in order for government to make good on its promises, Congress would have to put aside tens of trillions of dollars in the bank today. Keep in mind that our GDP is only $14 trillion.
In the absence of massive tax increases or cuts in benefits, in order to meet its promises Congress must cease spending on one in four programs by 2020, such as education and highway construction, and one in two by 2030, and by 2050 or so all federal revenue will be spent supporting Social Security, Medicare and prescription drug benefits. Such a scenario is unsustainable. There will be economic and political chaos. Today's politicians are not likely to take measures to avoid the coming chaos because senior citizens, the major beneficiaries of Social Security and Medicare, vote in large numbers and will exact a high political price. Plus, neither today's senior citizens nor today's politicians will be alive in 2050. I'd be more optimistic if my fellow Americans were simply suffering from congressional deception as opposed to their not caring about the economic calamity that awaits tomorrow's Americans. I'd be even more optimistic if today's seniors started putting heat on Congress to allow those Americans who want nothing to do with Social Security to opt out.
The U.S. Congress' deception was, and continues to be, a major player in our financial meltdown. In congressional hearings, before the meltdown, on the soundness of Fannie Mae and Freddie Mac, Rep. Maxine Waters said, "Through nearly a dozen hearings, we were frankly trying to fix something that wasn't broke. Mr. Chairman, we do not have a crisis at Freddie Mac, and particularly at Fannie Mae, under the outstanding leadership of Franklin Raines." Rep. Barney Frank, the ranking Democrat on the Financial Services Committee, said, "These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis. The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing." Other congressmen gave similar assurances. Unfortunately for our nation, the forces pushing for "affordable" housing won the day and saddled us with today's unprecedented financial disaster. How stupid is it of us to ask those who brought us "affordable" housing to now turn their attention to bringing us "affordable" health care?
Congressional deception about government finances means today's children will face a financial disaster that will make today's mess seem like a walk in the park. What's called the public debt stands at $11 trillion and growing. That pales in comparison to the federal government's unfunded liability -- obligations that are not covered by an asset of equal or greater value.
Mike Whalen, former policy chairman of the Dallas-based National Center for Policy Analysis, commenting on last year's Social Security Trustees annual report on the state of the Social Security and Medicare programs, said, "The report on the state of entitlement programs is rather grim -- the combined unfunded liabilities of both programs are $101 trillion." What that means is that in order for government to make good on its promises, Congress would have to put aside tens of trillions of dollars in the bank today. Keep in mind that our GDP is only $14 trillion.
In the absence of massive tax increases or cuts in benefits, in order to meet its promises Congress must cease spending on one in four programs by 2020, such as education and highway construction, and one in two by 2030, and by 2050 or so all federal revenue will be spent supporting Social Security, Medicare and prescription drug benefits. Such a scenario is unsustainable. There will be economic and political chaos. Today's politicians are not likely to take measures to avoid the coming chaos because senior citizens, the major beneficiaries of Social Security and Medicare, vote in large numbers and will exact a high political price. Plus, neither today's senior citizens nor today's politicians will be alive in 2050. I'd be more optimistic if my fellow Americans were simply suffering from congressional deception as opposed to their not caring about the economic calamity that awaits tomorrow's Americans. I'd be even more optimistic if today's seniors started putting heat on Congress to allow those Americans who want nothing to do with Social Security to opt out.
Taxes and Prosperity Lost by Walter Williams (April 13, 2009)
Ask the average person which is the correct answer to the following question: Which president gave the biggest tax cuts for the rich -- Reagan or Bush?
I would bet the rent money that you would not get the correct response, which is: Presidents have no taxing authority. Article I, Section 8 of the U.S. Constitution says: "The Congress shall have power to lay and collect taxes, duties, imposts and excises." I know that many politicians and news media people read my column. How do we characterize them if they continue to speak of presidents cutting or raising taxes?
Another tax question: If there's an imposition of a property tax on your land, who pays the tax? I guarantee you that land does not pay taxes; only people pay taxes. That means a tax on your land is a tax on you. You say, "Williams, that's pretty elementary, isn't it?" But what do you say to a politician or news media people who propose increasing corporate taxes as means to get rich corporations to pay their rightful share of government? They should be told that they speak nonsense because corporations, like land, do not pay taxes; only people pay taxes.
If a tax is levied on a corporation, and if it is to survive, it must raise the price of its product, or lower dividends or lay off workers. In each case, it is people, not some legal fiction called a corporation, who bear the burden of any tax levied on the corporation. An important subject area in economics called tax incidence says that the entity upon whom a tax is levied does not necessarily bear the burden of the tax. Some of the tax burden can be shifted to another party. That's precisely what corporations do and as such they are merely government tax collectors.
Here's another tax question: Which worker receives the higher pay: a worker on a road construction project moving dirt with a shovel or a worker moving dirt atop a giant earthmover? If you said the guy on the earthmover, go to the head of the class. But why? It's not because he's unionized or that employers just love earthmover operators. It's because having more capital (tools) makes him more productive and therefore earn higher wages.
It's not rocket science to conclude that whatever lowers the cost of capital formation enables workers to have more capital to work with and enjoy higher wages. Policies that raise the cost of capital formation such as capital gains taxes, low depreciation allowances and high corporate income taxes, and thereby reducing capital formation, serves neither the interests of workers, investors nor consumers.
Taxes also reduce transactions. I need my computer repaired. You and I agree that the job is worth $200. Suppose there's the imposition of a 30 percent income tax on you. That means you would net only $140 and might refuse the job. You might suggest that if I were willing to pay you $285 you would do the job because at that price your after-tax earnings will be $200 -- what doing the job is worth to you. There's a problem. The repair job was worth $200 to me, not $285. So it's my turn to say the heck with it, or would we and society be better off if you and I agreed to the repair job but did not tell anybody? I'd say yes, but we'd be criminals.
You might wonder how congressmen can get away with taxes and other measures that reduce our prosperity potential. Part of the answer is the anti-business climate promoted in academia and the news media. The more important reason is that prosperity foregone is invisible. In other words, we can never tell how much richer we would have been without today's level of congressional interference in our lives and therefore don't fight it as much as we should.
I would bet the rent money that you would not get the correct response, which is: Presidents have no taxing authority. Article I, Section 8 of the U.S. Constitution says: "The Congress shall have power to lay and collect taxes, duties, imposts and excises." I know that many politicians and news media people read my column. How do we characterize them if they continue to speak of presidents cutting or raising taxes?
Another tax question: If there's an imposition of a property tax on your land, who pays the tax? I guarantee you that land does not pay taxes; only people pay taxes. That means a tax on your land is a tax on you. You say, "Williams, that's pretty elementary, isn't it?" But what do you say to a politician or news media people who propose increasing corporate taxes as means to get rich corporations to pay their rightful share of government? They should be told that they speak nonsense because corporations, like land, do not pay taxes; only people pay taxes.
If a tax is levied on a corporation, and if it is to survive, it must raise the price of its product, or lower dividends or lay off workers. In each case, it is people, not some legal fiction called a corporation, who bear the burden of any tax levied on the corporation. An important subject area in economics called tax incidence says that the entity upon whom a tax is levied does not necessarily bear the burden of the tax. Some of the tax burden can be shifted to another party. That's precisely what corporations do and as such they are merely government tax collectors.
Here's another tax question: Which worker receives the higher pay: a worker on a road construction project moving dirt with a shovel or a worker moving dirt atop a giant earthmover? If you said the guy on the earthmover, go to the head of the class. But why? It's not because he's unionized or that employers just love earthmover operators. It's because having more capital (tools) makes him more productive and therefore earn higher wages.
It's not rocket science to conclude that whatever lowers the cost of capital formation enables workers to have more capital to work with and enjoy higher wages. Policies that raise the cost of capital formation such as capital gains taxes, low depreciation allowances and high corporate income taxes, and thereby reducing capital formation, serves neither the interests of workers, investors nor consumers.
Taxes also reduce transactions. I need my computer repaired. You and I agree that the job is worth $200. Suppose there's the imposition of a 30 percent income tax on you. That means you would net only $140 and might refuse the job. You might suggest that if I were willing to pay you $285 you would do the job because at that price your after-tax earnings will be $200 -- what doing the job is worth to you. There's a problem. The repair job was worth $200 to me, not $285. So it's my turn to say the heck with it, or would we and society be better off if you and I agreed to the repair job but did not tell anybody? I'd say yes, but we'd be criminals.
You might wonder how congressmen can get away with taxes and other measures that reduce our prosperity potential. Part of the answer is the anti-business climate promoted in academia and the news media. The more important reason is that prosperity foregone is invisible. In other words, we can never tell how much richer we would have been without today's level of congressional interference in our lives and therefore don't fight it as much as we should.
Taxation 101: Who Pays Corporate Taxes? by Walter Williams (April 14, 2009)
When we think about government spending, and the taxes needed to finance its spending, we should also think of the effects of taxation.
Suppose I hire you to repair my computer. The job is worth $200 to me and doing the job is worth $200 to you. The transaction will occur because we have a meeting of the mind. Now suppose there's the imposition of a 30 percent income tax on you. That means you won't receive $200 but instead $140. You might say the heck with working for me -- spending the day with your family is worth more than $140.
You might then offer that you'll do the job if I pay you $285. That way your after-tax earnings will be $200 -- what the job was worth to you. There's a problem. The repair job was worth $200 to me, not $285. So it's my turn to say the heck with it.
This simple example demonstrates that one effect of taxes is that of eliminating transactions, and hence jobs. But politicians have what we economists call a zero elasticity vision of the world. They think people will behave after taxes just as they behaved before taxes and the only effect of a tax is to bring in more revenue. Here's a question for you: Would we and society be better off if you and I agreed to the repair job but did not tell anybody? I'd say yes, but we'd be criminals.
Here's another tax question: Which worker receives the higher pay on a road construction project: a worker moving dirt with a shovel or a worker moving dirt atop a giant earthmover? If you said the guy on the earthmover, go to the head of the class.
But why? It's not because he's unionized or that employers just love earthmover operators. It's because he's more productive and the reason is that he has more capital (tools) with which to work. In general, the more capital workers have to work with, the higher their pay.
So what's a good policy for higher wages? One is to keep the cost of capital formation low so companies will do more of it. Policies that raise the cost of capital formation and lower risk-taking are high corporate income taxes, low allowances for depreciation and capital gains taxes. Those who want to see higher productivity gains and higher wages, of which I'm one, should champion tax reductions.
How in the world can tobacco companies survive and remain profitable in the wake of punitive taxes, penalties and court settlements? If the government and the courts imposed these multibillion dollar sanctions on the beef industry, it would have been long gone. The answer's easy. Corporations do not pay taxes, penalties and settlements.
A subject area in economics, called the incidence of taxation, says that the party upon whom a tax is levied does not necessarily pay the tax. They might shift it onto some other party. That's precisely what corporations do. They are merely tax collectors.
In the case of tobacco, the punitive taxes, penalties and settlements are shifted forward to consumers in the form of higher prices -- thus, government has punished smokers much more than tobacco companies.
If the government made a similar attack on the beef industry, it would be out of business. Why? There are many substitutes for beef that consumers would turn to, whereas there're few substitutes for tobacco. Imposition of oppressive taxes on goods having few substitutes is standard fare for government. King George III did it with what our ancestors called the Intolerable Acts (Stamp Tax, Tea Tax and others). But not for long. Americans of that day hadn't learned the lessons of submissiveness and compliance -- they rebelled.
Suppose I hire you to repair my computer. The job is worth $200 to me and doing the job is worth $200 to you. The transaction will occur because we have a meeting of the mind. Now suppose there's the imposition of a 30 percent income tax on you. That means you won't receive $200 but instead $140. You might say the heck with working for me -- spending the day with your family is worth more than $140.
You might then offer that you'll do the job if I pay you $285. That way your after-tax earnings will be $200 -- what the job was worth to you. There's a problem. The repair job was worth $200 to me, not $285. So it's my turn to say the heck with it.
This simple example demonstrates that one effect of taxes is that of eliminating transactions, and hence jobs. But politicians have what we economists call a zero elasticity vision of the world. They think people will behave after taxes just as they behaved before taxes and the only effect of a tax is to bring in more revenue. Here's a question for you: Would we and society be better off if you and I agreed to the repair job but did not tell anybody? I'd say yes, but we'd be criminals.
Here's another tax question: Which worker receives the higher pay on a road construction project: a worker moving dirt with a shovel or a worker moving dirt atop a giant earthmover? If you said the guy on the earthmover, go to the head of the class.
But why? It's not because he's unionized or that employers just love earthmover operators. It's because he's more productive and the reason is that he has more capital (tools) with which to work. In general, the more capital workers have to work with, the higher their pay.
So what's a good policy for higher wages? One is to keep the cost of capital formation low so companies will do more of it. Policies that raise the cost of capital formation and lower risk-taking are high corporate income taxes, low allowances for depreciation and capital gains taxes. Those who want to see higher productivity gains and higher wages, of which I'm one, should champion tax reductions.
How in the world can tobacco companies survive and remain profitable in the wake of punitive taxes, penalties and court settlements? If the government and the courts imposed these multibillion dollar sanctions on the beef industry, it would have been long gone. The answer's easy. Corporations do not pay taxes, penalties and settlements.
A subject area in economics, called the incidence of taxation, says that the party upon whom a tax is levied does not necessarily pay the tax. They might shift it onto some other party. That's precisely what corporations do. They are merely tax collectors.
In the case of tobacco, the punitive taxes, penalties and settlements are shifted forward to consumers in the form of higher prices -- thus, government has punished smokers much more than tobacco companies.
If the government made a similar attack on the beef industry, it would be out of business. Why? There are many substitutes for beef that consumers would turn to, whereas there're few substitutes for tobacco. Imposition of oppressive taxes on goods having few substitutes is standard fare for government. King George III did it with what our ancestors called the Intolerable Acts (Stamp Tax, Tea Tax and others). But not for long. Americans of that day hadn't learned the lessons of submissiveness and compliance -- they rebelled.
Senate Slavery Apology by Walter Williams (July 8, 2009)
Last month, the U.S. Senate unanimously passed Senate Resolution 26 "Apologizing for the enslavement and racial segregation of African-Americans." The resolution ends with: "Disclaimer. -- Nothing in this resolution (a) authorizes or supports any claim against the United States; or (b) serves as a settlement of any claim against the United States." That means Congress apologizes but is not going to pay reparations, as least for now.
Members of the Congressional Black Caucus have expressed concerns about the disclaimer, thinking that it's an attempt to stave off reparations claims from the descendants of slaves. Congressional Black Caucus Chairwoman Barbara Lee, D-Calif., said her organization is studying the language of the resolution and Rep. Bennie Thompson, D-Miss, said "putting in a disclaimer takes away from the meaning of an apology. A number of us are prepared to vote against it in its present form. There are several members of the Progressive Caucus who feel the same way."
It goes without saying that slavery was a gross violation of human rights. Justice would demand that all the perpetrators -- that includes slave owners, and African and Arab slave sellers -- make compensatory reparation payments to victims. Since slaves, slave owners and slave sellers are no longer with us, such compensation is beyond our reach and a matter to be settled in the world beyond.
Absent from the reparations debate is: Who pays? Don't say the government because the government doesn't have any money that it doesn't first take from some American. So which Americans owe black people what?
Reparations advocates don't want that question asked but let's you and I.
Are the millions of Europeans, Asians, and Latin Americans who immigrated to the U.S. in the 20th century responsible for slavery and should they be forced to cough up reparations money? What about descendants of Northern whites who fought and died in the name of freeing slaves? Should they cough up reparations money for black Americans? What about non-slave-owning Southern whites, a majority of whites; should they be made to pay reparations? And, by the way, would President Obama, whose father is Kenyan and mother white, be eligible for a reparations payment?
On black people's side of the ledger, thorny issues also arise.
Some blacks purchased other blacks as a means to free family members. But other blacks owned slaves for the same reason whites owned slaves -- to work farms or plantations. Are descendants of these blacks eligible and deserving of reparations? There is no way that Europeans could have captured millions of Africans. They had African and Arab help. Should Congress haul representatives of Ghana, Ivory Coast, Nigeria and Muslim states before them and demand they compensate American blacks because of their ancestors' involvement in capturing and selling slaves?
Reparations advocates make the foolish unchallenged pronouncement that United States became rich on the backs of free black labor. That's utter nonsense. Slavery has never had a very good record of producing wealth. Think about it. Slavery was all over the South. Buying into the reparations nonsense, you'd have to conclude that the antebellum South was rich and the slave-starved North was poor. The truth of the matter is just the opposite. In fact, the poorest states and regions of our country were places where slavery flourished: Mississippi, Alabama, and Georgia while the richest states and regions were those where slavery was absent: Pennsylvania, New York and Massachusetts.
The Senate apology is nothing more than political theater but it could be a slick way to get the camel's nose into the tent for future reparations. If the senators are motivated by white guilt, I have the cure.
About 15 years ago I wrote a "Proclamation of Amnesty and Pardon Granted to All Persons of European Descent" that is available at: www.gmu.edu/departments/economics/wew/gift.html
Born in Philadelphia in 1936, Walter E. Williams holds a bachelor's degree in economics from California State University (1965) and a master's degree (1967) and doctorate (1972) in economics from the University of California at Los Angeles.
Members of the Congressional Black Caucus have expressed concerns about the disclaimer, thinking that it's an attempt to stave off reparations claims from the descendants of slaves. Congressional Black Caucus Chairwoman Barbara Lee, D-Calif., said her organization is studying the language of the resolution and Rep. Bennie Thompson, D-Miss, said "putting in a disclaimer takes away from the meaning of an apology. A number of us are prepared to vote against it in its present form. There are several members of the Progressive Caucus who feel the same way."
It goes without saying that slavery was a gross violation of human rights. Justice would demand that all the perpetrators -- that includes slave owners, and African and Arab slave sellers -- make compensatory reparation payments to victims. Since slaves, slave owners and slave sellers are no longer with us, such compensation is beyond our reach and a matter to be settled in the world beyond.
Absent from the reparations debate is: Who pays? Don't say the government because the government doesn't have any money that it doesn't first take from some American. So which Americans owe black people what?
Reparations advocates don't want that question asked but let's you and I.
Are the millions of Europeans, Asians, and Latin Americans who immigrated to the U.S. in the 20th century responsible for slavery and should they be forced to cough up reparations money? What about descendants of Northern whites who fought and died in the name of freeing slaves? Should they cough up reparations money for black Americans? What about non-slave-owning Southern whites, a majority of whites; should they be made to pay reparations? And, by the way, would President Obama, whose father is Kenyan and mother white, be eligible for a reparations payment?
On black people's side of the ledger, thorny issues also arise.
Some blacks purchased other blacks as a means to free family members. But other blacks owned slaves for the same reason whites owned slaves -- to work farms or plantations. Are descendants of these blacks eligible and deserving of reparations? There is no way that Europeans could have captured millions of Africans. They had African and Arab help. Should Congress haul representatives of Ghana, Ivory Coast, Nigeria and Muslim states before them and demand they compensate American blacks because of their ancestors' involvement in capturing and selling slaves?
Reparations advocates make the foolish unchallenged pronouncement that United States became rich on the backs of free black labor. That's utter nonsense. Slavery has never had a very good record of producing wealth. Think about it. Slavery was all over the South. Buying into the reparations nonsense, you'd have to conclude that the antebellum South was rich and the slave-starved North was poor. The truth of the matter is just the opposite. In fact, the poorest states and regions of our country were places where slavery flourished: Mississippi, Alabama, and Georgia while the richest states and regions were those where slavery was absent: Pennsylvania, New York and Massachusetts.
The Senate apology is nothing more than political theater but it could be a slick way to get the camel's nose into the tent for future reparations. If the senators are motivated by white guilt, I have the cure.
About 15 years ago I wrote a "Proclamation of Amnesty and Pardon Granted to All Persons of European Descent" that is available at: www.gmu.edu/departments/economics/wew/gift.html
Born in Philadelphia in 1936, Walter E. Williams holds a bachelor's degree in economics from California State University (1965) and a master's degree (1967) and doctorate (1972) in economics from the University of California at Los Angeles.
California Screaming
The Golden State's political class comes unglued in the face of a citizens' revolt.
Matt Welch | August/September 2009 Print Edition
A very good piece on how California is a smaller version of the U.S. The people are revolting.
On May 19, California voters went to the polls to decide whether to pass a package of six tax-and-gimmick ballot propositions. Its supporters—Republican Gov. Arnold Schwarzenegger, Democratic legislative leaders, the California Teachers Association, and the overwhelming majority of the state’s major newspapers—billed it as the last best hope to plug Sacramento’s $24 billion budget deficit. “Either pass it,” warned the Los Angeles Times editorial board, “or risk fiscal disaster.”
Those who believe that either money or the media determine political outcomes should pay close heed to what happened next: Although opponents were outspent by more than 7 to 1, they trounced the state’s political class, rejecting five of the six measures by an average of 30 percentage points. The only proposition to pass was an anger-driven new law that limits elected officials’ salaries.
Faced with such thorough repudiation, California’s best and brightest then did a telling thing. They lashed right back.
The Los Angeles Times headlined its morning-after news analysis, “California Voters Exercise Their Power—and That’s the Problem.” Sacramento columnist George Skelton argued that “voters helped get themselves into this fix” by “passing feel-good ‘ballot box budgeting’ initiatives” and sanctioning “heavy borrowing” for “infrastructure projects.” Business columnist Michael Hiltzik averred that “far more blame for the deficit belongs to California voters” because “year in, year out, they enact spending mandates at the polls, often without endowing a revenue source.” Missing from any of these critiques was the fact that the Times’ own editorial board endorsed more than 90 percent of the very same ballot-box bond measures during the last decade. No matter: A perpetrator had been located.
“Good morning, California voters,” The Sacramento Bee’s post-election editorial began. “Do you feel better, now that you’ve gotten that out of your system?” The Bee, which (like the Times) had endorsed four of the five losing measures, came under immediate attack for its heavy-handed, citizen-blaming sarcasm. (A sample: “So, now that you’ve put those irksome politicians in their place, maybe it’s time to think about this: Since you’re in charge, exactly what do you intend to do about that pesky $25 billion hole in the budget?”) Rush Limbaugh gleefully read passages on his show, San Diego Union-Tribune editorial writer Chris Reed called it “staggeringly juvenile, arrogant and revealing,” and commenters on the Bee’s website were full of reactions like, “What an obnoxious editorial. Nevertheless, it illustrates that the Bee is completely in favor of bigger government and higher taxes.”
Then another funny thing happened: The Bee scrubbed the editorial off its website, replacing it with a much more conciliatory piece, addressed this time to legislators. The original editorial had been posted in “error,” the paper explained, and the new piece was the one that appeared in the print edition. “That [first] article was a draft prepared for internal discussion among members of The Bee’s editorial board,” a brief note said. “Such discussions are a routine part of our work, and frequently lead to editorials that are considerably different from writers’ first drafts.”
This instant airbrushing, normally fodder for such journalism-tracking websites as Jim Romenesko’s Media News, went virtually ignored by all but a few mostly right-leaning websites. So did another colossal gaffe, by the aforementioned Los Angeles Times columnist Michael Hiltzik, who thundered that the very notion California had a “spending problem” was an “infectious myth.”
Hiltzik claimed that the state government’s budget growth had kept pace “almost to the penny” with growth in population and inflation during the last decade. There were three problems with this analysis: Hiltzik miscalculated population growth (claiming 30 percent instead of 14 percent), he chose a federal inflation rate of 50 percent during that period instead of the California Consumer Price Index figure of 35 percent, and, most important, he excluded from state spending more than $100 billion in bond measures. This whopper was roasted and dissected on local talk radio, but it was unmentioned by more august repositories of public policy and journalism debate, such as the Times-tracking LA Observed.
Rarely has the chasm between elite political discourse and grubby popular opinion been displayed in such sharp relief. The implications of this citizen revolt—and the hostile reactions to it—stretch far beyond Nevada’s western border. California is the Ghost of Federal Government Future.
During the last two decades, the Golden State has been transformed from what was once known as the nation’s most anti-labor outpost to a state essentially run by public-sector unions. Nearly three in five publicsector workers are unionized, compared to less than two in five public employees in other states. The Democratic Party, which is fully in hock to unions, has controlled the legislature and most statewide posts, with the notable exception of the governor’s mansion, for more than a decade. That means more government workers, higher salaries, and drastically higher pension costs.
According to Adam Summers—a policy analyst at the Reason Foundation, the nonprofit that publishes this magazine—the state’s annual pension fund contribution vaulted from $321 million in 2000–01 to $7.3 billion last year. According to public databases, more than 5,000 people are drawing pensions in excess of $100,000 from the state of California each year.
So pervasive is the union influence that big labor doesn’t even try to defend its deleterious effects on California’s finances. Just before the special election, a member of the Los Angeles Times editorial board asked Service Employees International Union chief Andy Stern to respond to charges that unions are the 21st-century equivalent of the railroads that were once all-powerful in California. Stern verbally shrugged: “I think democracy is an ugly thing at times.”
That ugliness has made the California budget, like those in most of the other 49 states, less efficient and more bloated. Government spending, unlike spending in the private economy, is a zero-sum game—especially on the state level, since governors can’t print money. Every dollar spent gilding a pension is a dollar not spent funding an orphanage. Naturally, the same elite outlets that were busy blaming voters after the election spent even more time detailing the horrors of the “annihilating cuts,” as the Los Angeles Times called them in a news article, that were coming down the pike. (In early June, the paper invited readers to be shocked that a high school with 3,200 students would have to make do with just three guidance counselors.) Bloated pension costs and the increasingly inefficient provision of state services received a fraction of the coverage.
The federal government is now run by a president and Congress more responsive to union concerns than any in at least two decades. The same bloat currently bogging down statehouses and city halls is being duplicated in boomtown Washington, D.C. President Barack Obama even brought Andy Stern in to help warn Schwarzenegger that federal stimulus money would not be disbursed to California unless the governor rescinded some proposed state job cuts. Though that threat was later withdrawn, Schwarzenegger at press time was pushing for a measly work force reduction of 2 percent.
But there’s another interpretation of California’s rebellion, one with far sunnier implications for those of us who prefer our governments constrained. Faced with a political class that ignored bureaucratic inefficiency, that demanded higher taxes, that filled the newspapers with scare stories about people who will literally die as a result of budget cuts, the citizens of one of the bluest states in the nation collectively said we just don’t believe you anymore. If even California’s famous fruits and nuts can call the statists’ bluff, there may be hope for the rest of the country.
Matt Welch | August/September 2009 Print Edition
A very good piece on how California is a smaller version of the U.S. The people are revolting.
On May 19, California voters went to the polls to decide whether to pass a package of six tax-and-gimmick ballot propositions. Its supporters—Republican Gov. Arnold Schwarzenegger, Democratic legislative leaders, the California Teachers Association, and the overwhelming majority of the state’s major newspapers—billed it as the last best hope to plug Sacramento’s $24 billion budget deficit. “Either pass it,” warned the Los Angeles Times editorial board, “or risk fiscal disaster.”
Those who believe that either money or the media determine political outcomes should pay close heed to what happened next: Although opponents were outspent by more than 7 to 1, they trounced the state’s political class, rejecting five of the six measures by an average of 30 percentage points. The only proposition to pass was an anger-driven new law that limits elected officials’ salaries.
Faced with such thorough repudiation, California’s best and brightest then did a telling thing. They lashed right back.
The Los Angeles Times headlined its morning-after news analysis, “California Voters Exercise Their Power—and That’s the Problem.” Sacramento columnist George Skelton argued that “voters helped get themselves into this fix” by “passing feel-good ‘ballot box budgeting’ initiatives” and sanctioning “heavy borrowing” for “infrastructure projects.” Business columnist Michael Hiltzik averred that “far more blame for the deficit belongs to California voters” because “year in, year out, they enact spending mandates at the polls, often without endowing a revenue source.” Missing from any of these critiques was the fact that the Times’ own editorial board endorsed more than 90 percent of the very same ballot-box bond measures during the last decade. No matter: A perpetrator had been located.
“Good morning, California voters,” The Sacramento Bee’s post-election editorial began. “Do you feel better, now that you’ve gotten that out of your system?” The Bee, which (like the Times) had endorsed four of the five losing measures, came under immediate attack for its heavy-handed, citizen-blaming sarcasm. (A sample: “So, now that you’ve put those irksome politicians in their place, maybe it’s time to think about this: Since you’re in charge, exactly what do you intend to do about that pesky $25 billion hole in the budget?”) Rush Limbaugh gleefully read passages on his show, San Diego Union-Tribune editorial writer Chris Reed called it “staggeringly juvenile, arrogant and revealing,” and commenters on the Bee’s website were full of reactions like, “What an obnoxious editorial. Nevertheless, it illustrates that the Bee is completely in favor of bigger government and higher taxes.”
Then another funny thing happened: The Bee scrubbed the editorial off its website, replacing it with a much more conciliatory piece, addressed this time to legislators. The original editorial had been posted in “error,” the paper explained, and the new piece was the one that appeared in the print edition. “That [first] article was a draft prepared for internal discussion among members of The Bee’s editorial board,” a brief note said. “Such discussions are a routine part of our work, and frequently lead to editorials that are considerably different from writers’ first drafts.”
This instant airbrushing, normally fodder for such journalism-tracking websites as Jim Romenesko’s Media News, went virtually ignored by all but a few mostly right-leaning websites. So did another colossal gaffe, by the aforementioned Los Angeles Times columnist Michael Hiltzik, who thundered that the very notion California had a “spending problem” was an “infectious myth.”
Hiltzik claimed that the state government’s budget growth had kept pace “almost to the penny” with growth in population and inflation during the last decade. There were three problems with this analysis: Hiltzik miscalculated population growth (claiming 30 percent instead of 14 percent), he chose a federal inflation rate of 50 percent during that period instead of the California Consumer Price Index figure of 35 percent, and, most important, he excluded from state spending more than $100 billion in bond measures. This whopper was roasted and dissected on local talk radio, but it was unmentioned by more august repositories of public policy and journalism debate, such as the Times-tracking LA Observed.
Rarely has the chasm between elite political discourse and grubby popular opinion been displayed in such sharp relief. The implications of this citizen revolt—and the hostile reactions to it—stretch far beyond Nevada’s western border. California is the Ghost of Federal Government Future.
During the last two decades, the Golden State has been transformed from what was once known as the nation’s most anti-labor outpost to a state essentially run by public-sector unions. Nearly three in five publicsector workers are unionized, compared to less than two in five public employees in other states. The Democratic Party, which is fully in hock to unions, has controlled the legislature and most statewide posts, with the notable exception of the governor’s mansion, for more than a decade. That means more government workers, higher salaries, and drastically higher pension costs.
According to Adam Summers—a policy analyst at the Reason Foundation, the nonprofit that publishes this magazine—the state’s annual pension fund contribution vaulted from $321 million in 2000–01 to $7.3 billion last year. According to public databases, more than 5,000 people are drawing pensions in excess of $100,000 from the state of California each year.
So pervasive is the union influence that big labor doesn’t even try to defend its deleterious effects on California’s finances. Just before the special election, a member of the Los Angeles Times editorial board asked Service Employees International Union chief Andy Stern to respond to charges that unions are the 21st-century equivalent of the railroads that were once all-powerful in California. Stern verbally shrugged: “I think democracy is an ugly thing at times.”
That ugliness has made the California budget, like those in most of the other 49 states, less efficient and more bloated. Government spending, unlike spending in the private economy, is a zero-sum game—especially on the state level, since governors can’t print money. Every dollar spent gilding a pension is a dollar not spent funding an orphanage. Naturally, the same elite outlets that were busy blaming voters after the election spent even more time detailing the horrors of the “annihilating cuts,” as the Los Angeles Times called them in a news article, that were coming down the pike. (In early June, the paper invited readers to be shocked that a high school with 3,200 students would have to make do with just three guidance counselors.) Bloated pension costs and the increasingly inefficient provision of state services received a fraction of the coverage.
The federal government is now run by a president and Congress more responsive to union concerns than any in at least two decades. The same bloat currently bogging down statehouses and city halls is being duplicated in boomtown Washington, D.C. President Barack Obama even brought Andy Stern in to help warn Schwarzenegger that federal stimulus money would not be disbursed to California unless the governor rescinded some proposed state job cuts. Though that threat was later withdrawn, Schwarzenegger at press time was pushing for a measly work force reduction of 2 percent.
But there’s another interpretation of California’s rebellion, one with far sunnier implications for those of us who prefer our governments constrained. Faced with a political class that ignored bureaucratic inefficiency, that demanded higher taxes, that filled the newspapers with scare stories about people who will literally die as a result of budget cuts, the citizens of one of the bluest states in the nation collectively said we just don’t believe you anymore. If even California’s famous fruits and nuts can call the statists’ bluff, there may be hope for the rest of the country.
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