Feel Good Policies

From Bryan Caplan at the Library of Economics and Liberty:


The minimum wage is far from the most harmful regulation on the books.  Why then do I make such a big deal about it?  Because it is a symbol of larger evils.

From the standpoint of public policy, the minimum wage is a symbol of the view that "feel-good" policies are viable solutions to social ills: "Workers aren't paid enough?  Pass a law so employers have to pay them more.  Problem solved."  From the standpoint of social science, the minimum wage is a symbol of the myopic view that you can become an expert on X by reading nothing but the leading research that explicitly addresses X: "Does the minimum wage reduce employment?  Read the top papers on the minimum wage.  Problem solved."

There are no sequester cuts.

Eli,

The Budget Control Act of 2011, the dreaded sequester bill, limits discretionary (ex war and other emergency accounts) spending to $1.043 trillion in fiscal 2012, $1.047 trillion in 2013 and $1.066 trillion in 2014. By the way, discretionary spending in fiscal 2011 was $1.06 trillion.

Here's the Budget Control Act. Page 43 shows the limits in spending. You can find fiscal 2011 discretionary spending in CBO's Budget and Economic Outlook, January 2012, Table 3-5, but subtract the Iraq/Afghanistan spending to arrive at the $1.06 trillion in discretionary spending subject to the Budget Control Act.

So where the heck are these cuts? 750,000 people losing their jobs. Head Start closing down. Teachers eating cat food, etc.

The cut is a cut to prior budget requests. That is, in prior fiscal years, there was a request for higher spending this year. There is a cut from the budget request, but not a cut from last year's amount. In essence, the federal government isn't getting a raise in its allowance, so is claiming it is suffering from a cut.

Now since the federal government was able to host White House Tours on $1 trillion last year, why is it unable to host White House Tours on $1 trillion this year.?

Bill

World Doesn't End.

Eli,

You may have noticed the world didn't end yesterday, Obama and his prognosticators (they must have been the same people who warned of the Mayan Calendar) have been predicting doom and gloom if the Federal government doesn't spend some $43 billion dollars this year. That's about, 1.0% of total Federal Spending, about 0.8% of total government (with state and local included) spending,  about 0.2% of the total economy and here's a fun fact, and less than one-third of the amount of cash Apple is sitting on.

Yet Cuba didn't invade Florida, Canada didn't take back the Oregon Territory, Alaska still belongs to the US, planes didn't fall out of the sky, (my flight yesterday was about 10 minutes late, which is on-time in FAA-land) and as best I can tell traffic lights are still working.

The only way this cut can be felt by more than a minuscule number of Americans, the ONLY way, is if there is an incompetent executive deliberately wanting to make it that way.

On that basis I shouldn't be so optimistic.

Bill

Democrats Endorse the Laffer Curve.

Eli,

This is from Robert Caro's, "The Passage of Power,"

Kennedy's other major legislative priority had been a bill to reduce income and corporate taxes by a total of $11 billion per year, a reduction that many economists felt would provide a stimulus to the economy perhaps three times the amount of the reduction (about $33 billion per year, in other words) and would therefore not only ease a persistent unemployment problem but would also, despite the reduction in rates, increase tax revenue, thereby providing funds for the expansion of government spending on social programs liberals advocated.

One of the sillier tropes bandied around these days is the Republicans have turned extreme and the Democrats by implication have remain unchanged. Not so much silly, as ignorant.

Parties change in the US. Always have. If they don't they become the Federalists, or Whigs.

Bill

Oh, and this year's version of the Democrats are so intent on redistribution they are willing to sacrifice growth, that is a change.

 

We are doomed. Idiocracy has taken over.

An editorial by Senator Tom Harkin, D-Iowa. 

http://www.usatoday.com/story/opinion/2013/02/24/minimum-wage-sen-tom-harkin/1943745/

$9 an hour is not enough: Opposing view

Every morning, millions of Americans drop their children off at day care, grab a cup of coffee from the corner shop, and drop their car keys off with a parking garage attendant before arriving at an office that has been cleaned overnight by a janitor.

In the morning rush, few of us probably stop to think about the workers who are making our routine possible — and we are certainly not thinking about how much they earn.

OUR VIEW: Index wage increase to inflation

Many minimum-wage workers — who serve in important and often difficult jobs, but earn just $7.25 an hour — do not earn enough to pay the bills, much less achieve the American Dream. Since its peak in 1968, the minimum wage has lost 31% of its purchasing power, while the prices of basic necessities such as food and rent have continued to climb.

This means that American workers are falling behind. If we are truly going to rebuild the middle class, we must start by helping these workers.

While I was heartened to hear President Obama make the minimum wage a centerpiece of his State of the Union Address, I believe that his proposal of $9 per hour does not go far enough to ensure that working families can make ends meet.

Soon, Rep. George Miller, D-Calif., and I will introduce legislation that would gradually increase the minimum wage to $10.10 per hour, and raise the minimum wage for tipped workers for the first time in more than 20 years. Our proposal, like President Obama's, would also provide for automatic increases linked to changes in the cost of living.

Raising the minimum wage is one of the simplest and most effective ways to help working families succeed. It also helps our economy by putting additional money in the hands of consumers who will spend it right away in their local communities.

Contrary to publicized myths, research proves that increasing the minimum wage will not cost us jobs; in fact, our proposal would create at least 100,000 jobs through increased consumer spending.

Our nation is on the road to recovery — a recovery that can and must include a raise in the minimum wage.

Sen. Tom Harkin, D-Iowa, is chairman of the Senate Health, Education, Labor and Pensions Committee.

New York Times Calls for 35% Tax Hike on Middle Class

Eli,

Today's editorial in the NY Times calls for at least a 35% increase in taxes on the middle class. Welcome to your liberal paradise.

Specifically, the Times says,

new taxes on high-income Americans are a matter of necessity and fairness; they are also a necessary precondition to what in time will have to be tax increases on the middle class. 

It also shares one of the reasons it is so intent on raising taxes on the millionaires and billionaires who make more than $250,000 per year.

there will never be a consensus for more taxes from the middle class without imposing higher taxes on wealthy Americans

So there we have it, the Times finally admits what I have maintained for quite some time, the real goal of this administration is increased taxes on the middle class.

How high will taxes need to be to pay for our liberal Shangri-La?

This graph is from the CBO's Budget and Economic Outlook for Fiscal Years 2013-2023.

 Current tax revenues about 17% of GDP. Projected outlays in Fiscal 23 about 23% of GDP, taxes have to go up about 35%. But wait, there's more. Projected outlays rise sharply after 2023 and consume upwards of 30% of GDP, necessitating a doubling of taxes.

Sequester looks pretty darn good from my perspective.

Bill

Dwight Lee: A Higher Minimum Wage—but Not for Interns in Congress - WSJ.com

Everyone plays by the same rules etc.

http://online.wsj.com/article/SB10001424127887323478004578308401946621488.html?mod=WSJ_Opinion_LEADTop

Dwight Lee: A Higher Minimum Wage—but Not for Interns in Congress

By DWIGHT LEE

President Obama called in his State of the Union for an increase in the minimum wage to $9 an hour by 2015, from $7.25, notwithstanding the evidence that it will increase unemployment among young, entry-level workers. This push by Mr. Obama and his congressional allies is especially difficult to understand because they clearly appreciate how valuable it is for young people to gain workplace experience and make connections that can lead to career opportunities.

Internships at the White House, on Capitol Hill and elsewhere in Washington introduce thousands of young people to working in government and to the discipline and industry needed to function in any workplace. Yet these unpaid positions are almost by definition reserved for the offspring of the well-to-do who are least in need of such an advantage.

Associated Press

Sen. Barbara Boxer (D., Calif.)

Consider Barbara Boxer, the Democratic senator from California, who urged the country to "heed the president's call" to raise the minimum wage. Throughout the year, Ms. Boxer offers internships that provide "a valuable opportunity to see how a Senate office functions," according to her website. Interns are advised that they "should dress in a professional manner befitting the representative of a U.S. Senator at all times." Her interns may dress in a professional manner, but they are unpaid.