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In a recent commentary piece the Heritage Foundation’s Robert Rector explains the US Census Bureau’s ability to distort the reality of poverty, making it appear more severe than it truly is in order to continue expanding the social welfare state at the expense of taxpayers.
According to Rector, a leading expert on poverty and welfare, the Census Bureau does not take into account any of the numerous social welfare programs an individual or family may already be benefiting from when calculating the family’s income for poverty-measurement purposes.
For example, the poverty level cutoff for a family of four in 2011 was approximately $23,000 dollars, meaning that any family earning less than this from wages would automatically be counted towards the overall national poverty rate. What is misleading about this system of calculation is that a family whose earned income is $23,000 could still be benefiting from a variety of welfare programs—food stamps, subsidized housing, Medicaid, and the earned income tax credit to name just a few—thus boosting the family’s effective revenues up above the so-called poverty line by hundreds or even thousands of dollars annually.
The result? The poverty level appears higher than it actually is, giving social welfare enthusiasts the ammunition to call for increasing government spending, while draining taxpayers and racking up massive deficits:
“In other words, government now spends on welfare five times the amount needed to raise all families out of poverty---and is about to spend even more.”
Last year welfare spending for a variety of anti-poverty programs totaled $927 billion dollars, excluding three of the largest social programs—Social Security, Medicare, and Unemployment Insurance. And if the past 48 years since the “War on Poverty” began in 1964 are any indication of future spending, that number will continue upwards.
The Census Bureau’s misleading poverty calculations are just another example of the willingness of Washington bureaucrats to use any excuse to leech taxpayers dry in order to fund an ever-growing social welfare state. These findings are even more upsetting in light of the Obama administration’s gutting of Clinton-era welfare reform by executive fiat.
This is another worthy example of spending more than necessary and fixing less than is needed.
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From the "I'm So Glad We Reauthorized That" File: More Ex-Im Bank Fail
It’s well known these days that green energy endeavors are extremely sound investments, especially for the U.S. government, whose track-record in this area is not at all besmirched by one costly failure after another after another after another.
That’s why it is such a total shock that immediately after securing an Export-Import Bank (Ex-Im Bank) backed loan, the Denmark-based LM Wind Power turned around and laid off more than 200 U.S. workers. Apart from the fact that one government backed green energy venture after another has lost money or gone under, there was no way Ex-Im Bank could have seen this coming; probably the details below from The Washington Free Beacon were closely guarded secrets:
When LM Wind Power came to Little Rock, Arkansas, in 2007, it said it would employ 1,000 people by 2012. But the global economic crunch led to diminishing demand. Three months before its loan guarantee was finalized, LM Wind Power announced its profits had fallen 41 percent last year.
LM Wind Power also has had numerous citations for workplace safety violations. The Department Of Labor’s Occupational Safety and Health Administration cited the firm 11 times in an investigation beginning October 2010 for exposing workers to unsafe conditions and noted the company had demonstrated a “continued pattern of failing to comply” with OSHA standards.
In 2010, LM Wind Power Blades was cited with OSHA violations because of conditions that killed a worker.
The Department of Energy has been getting a lot of attention for its failed Title 17 taxpayer-backed loan guarantee program, but it’s far from the only agency that deserves close scrutiny (if not elimination) for persistent forays into doomed green energy projects. Like a slot-machine addict, the weekly news of government funded failures seem to serve as no reason why the next big investment won’t be the one that finally pays out.
Again, despite repeated and costly failures in the green energy industry, the Heritage Foundation reports that Ex-Im Bank recently made a $2 BILLION loan for green projects such as wind and solar energy in South Africa – not several years ago when everyone was still flush, not last summer before the news of Solyndra broke, but last week - after numerous and costly failures:
“To now, Ex-Im Bank has not cost the taxpayer money. But there are strong reasons to think this loan is a mistake. When SolarReserve or some of its South African partners go under in the next couple years, Ex-Im will face renewed congressional demands that it be curbed or closed,” said Heritage’s Derek Scissors, senior research fellow in Asian Studies.
On top of the fact that Ex-Im Bank’s market-distorting actions are well-outside the role of government and seriously poor fiscal policy, the repeated bad investments and inherent cronyism within the institution should have been more than enough reason to oppose reauthorizing the bank. The Examiner’s Tim Carney sums up the cronyist connection here:
For years, I have been saying that green energy is the place to look if you’re looking for tales of cronyism, corruption, and corporate welfare. It has all the elements: profits dependent on subsidies, customers that are often government-protected monopolies, deep involvement of finance types ranging from Goldman Sachs to politically connected VC, PE, and hedge funds.
These elements are all too alive and well within Ex-Im Bank. You can read more about the crony capitalists at the helm here.
With no sign of being afflicted by simple logic in the near future and with so many bad projects out there still to fund it’s a good thing that a “compromise” was struck to reauthorize Ex-Im Bank just a few short months ago. Outside of Washington, compromises tend to mean that each side of a fight loses a bit to meet somewhere in the middle. In this instance, the middle was a massive funding increase from $100 billion to $140 billion, so there are still plenty of funds to throw down the green energy money pit.
PS: In other green energy news, Fisker Automotive, known best for it’s very flammable high end Fisker Karma hybrid cars and recipient of millions of dollars in DOE loans, just named its new CEO, who is the former head of Chevy Volt at GM. Chevy Volt, it should be noted, made no money and costs taxpayers thousands of dollars per car. This should end well.
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Despite Expensive Missteps, Ryan Solid on Fiscal Issues and Spending Reform
With Republican Presidential candidate Mitt Romney’s weekend announcement that he has selected Congressman Paul Ryan (R-WI) as his vice presidential pick, many voters are seeking to learn more about the seven term fiscal hawk, and author of the Ryan Budget.
One of the key tools NTU offers to help taxpayers and voters evaluate how members of Congress stack up when it comes to taxes and spending is the comprehensive NTU Rates Congress. As discussed in more detail HERE, Ryan has an above average lifetime rating of 75%, including six “Taxpayers’ Friend” awards.
However, a few of the reasons those Ratings are not higher have also earned Ryan criticism from fiscal conservatives - they include Ryan’s votes for the TARP bailout, the auto bailout, Medicare Part D, No Child Left Behind, the debt ceiling, and Davis-Bacon wage controls.
Still, Ryan has taken a leadership position in addressing the nation’s impending entitlement insolvency and ballooning public debt, championing his budget blueprint to responsibly transition the United States to a more sustainable fiscal path. According to the Congressional Budget Office, Ryan’s proposal would reduce deficits by $3.26 trillion from 2013 through 2022 when compared to President Obama’s plan. In addition, the Ryan Plan would simplify income taxes with two tax rates of 10% and 25%, compared to the current six brackets.
Ryan’s most significant reform would be with regards to Medicare. If Congress continues to spend as they have, debt will reach 194% of GDP by 2040, but if Ryan’s budget were adopted debt would be a mere 38 % of GDP, saving taxpayers trillions of dollars.
Paul Ryan deserves much credit from taxpayers for shifting the debate in Congress to solutions for the big fiscal crises that face America on entitlements, debt, and run-away spending.
Whichever duo is elected this November, a set of extremely pressing budgetary concerns will await them. Bringing Paul Ryan onto the ticket as Vice Presidential nominee is a good sign for taxpayers and voters who are starving for a plan to address our long-term debt and budget concerns without recovery-crushing tax hikes.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Last month the United States Department of Housing and Urban Development (HUD) awarded nearly 5 million dollars in taxpayer-funded grants to 15 organizations through its “Tenant Resource Network”; which, according to the HUD website:
“make[s] grants to qualified nonprofit organizations to assist, inform, educate and engage tenants living in certain Section 8-assisted properties at risk of losing affordability protections or project-based rental assistance.”
In other words, taxpayers are not only being forced to fund Section 8 housing for “low-income” tenants, but they are also being forced to subsidize efforts which ensure a steady stream of taxpayer dollars will continue to be poured into the program, even as the federal government regularly runs an annual deficit of over $1 trillion dollars.
These grants came under fire for waste and abuse nearly ten years ago and were subsequently squelched until June of this year when HUD unveiled them again as a so-called “new” initiative. Apparently the department has forgotten the 2003 HUD Office of the Inspector General findings in the Semi Annual Report to Congress, which noted that ineligible recipients received funds and funds were misdirected to lobbying efforts:
“In our grantee audit report we identified $600,000 of ineligible costs and over $1.6 million of unsupported costs. In addition, nine grantees used a portion of their Section 514 funds for lobbying activities directed at Congress…”
This is simply another example of an irresponsible federal government attempting to fix a problem by creating several more, and putting taxpayers on the hook to pay for its newfangled social welfare programs while recklessly adding to the nation’s already disastrous deficit.
On a brighter note, Congresswoman Diane Black (R-TN), has been working to eliminate this wasteful abuse of our hard-earned dollars, and has sponsored a bill called the Stop Tenant Organizing Promotion Act (STOP Act), which fiscal conservatives can support via the YouCut Initiative which could save taxpayers $100 million dollars over ten years.
It’s not going to fix the deficit, but it’s certainly not chump change to those of us who have to earn a living.
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There’s no getting around it—California is underwater. State officials are constantly telling taxpayers that they aren’t coughing up enough money to fund “essential” services, necessitating huge tax hikes or savage program cuts (or both) to make ends meet. But my mother always said, “Actions speak louder than words,” and California’s actions say that legislators’ spending addiction is alive and well.
Despite facing unprecedented budget challenges, last Friday the State Senate approved funding for America’s first “bullet” train. It’s supposed to shoot from San Francisco to Los Angeles, but right now it’s aimed squarely at the taxpayers’ collective wallet. Total cost of this monstrosity is estimated to be $203 billion. Terms like “irresponsible” and “out-of-control” don’t even begin to describe the madness of the Senate’s vote. High speed rail will be catastrophic for the state budget.
Of course, this project comes with promises of instantly lowering the state’s 10.8 percent unemployment rate, eliminating traffic congestion, and saving Mother Earth. Hate to break it to you, but the chances of really, really fast train solving your state’s problems are slim to none (closer to none).This project is a boondoggle of the highest order.
But there’s an even bigger problem: they quite literally don’t have the money. The geniuses in the legislature passed a budget with $4.75 billion in funds that don’t exist for the high-speed rail project with the hope that taxpayers will approve massive tax increases on the November ballot to cover it. California has higher tax burdens than all but five states and a business tax climate that’s worse than all but two states. Appropriating dollars based on the hope that citizens approve even higher taxes is just reckless and foolish.
It’s time to organize and fight back. The citizens of Californian must send Governor Brown and his cronies a message in November by rejecting his tax increases. Not only has Brown authorized billions of dollars for the bullet train disaster, but he's attempting to raise the sales tax to 7.5 percent and impose an income tax increase on those making more than $250,000 per year (rates for Californians making more than $1 million will jump from 10.3 percent to 13.3 percent).
The insanity has already gone too far. Fifteen thousand California millionaires abandoned ship from 2000-2003, and the state’s “leaders” have done absolutely nothing to stop the bleeding since then. If this financial bullet hits its mark, how will California survive?
The good news is that there are some signs that the people of California are sick of sinking. In a July 5 poll, 1 in 3 voters said they would be less likely to support Governor Brown’s tax increases if funding for the train was approved because they understand that a state that’s appropriating dollars it doesn’t have is not being responsible with the ones it does.0 Comments | Post a Comment | Sign up for NTU Action Alerts
CBO Reports: FY2012 for the Win with Record Spending and Debt
Congrats, America! We’re on track to both spend more than $3 trillion and to rack up an over $1 trillion deficit for the FOURTH year in a ROW! Yes, we are that good. Sure, it took us 220-some odd years to break that record back in 2009, but since then it’s been nothing but spend, spend, spend.
Nine months into FY2012, the CBO reports that the federal government has run up a $905 billion deficit in just the first nine months, twice as high as any annual deficits prior to FY 2009. So far, we’ve spent a total of $2.705 trillion in the fiscal year, more than any year prior to FY 2007 – and that’s with three months left in the fiscal year. What really sets this accomplishment apart is that we’ve been able to keep up the pace of deficit spending (33.1% of all spending so far this year has been borrowed) even with more taxpayer funds flowing into the government coffers. The $1.824 trillion in taxes that have been collected so far are up 5.2% over the same time last year.
In June alone, spending was up $24 billion over the same period last year. Interestingly, one of the biggest drivers was your friend, and mine, TARP. Who could have ever foreseen that a program could cost more than anticipated?
TARP: Outlays rose by $62 billion, mainly because adjustments to the estimated costs of earlier transactions reduced outlays by $42 billion in 2011 and increased them by $21 billion in 2012.
As we continue to maintain record high spending and deficit levels year after year, one can only wonder – how much worse could it get next year? Luckily, Congress is looking at even more spending with an almost $1 trillion Farm Bill on the table, an army of new IRS agents to hire to enforce ObamaCare, and looming Social Security shortfalls, just to name a few budget busters on the horizon.
Unless real changes are made, and made quickly, I’m sure we’ll be able to beat these numbers next time around.
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NTU has been hard at work opposing the massively wasteful, nearly-$1 trillion food and farm welfare legislation that Washington knows as "the Farm Bill." In some of the best news we've had on the issue in weeks, The Hill reported today that House Speaker John Boehner (R-OH) is leery of the pork-filled legislation and could hold the key to protecting taxpayers from it. We've been watching the markup debate over 100 amendments unfold with shock and horror, as positive measures to reduce government intervention in the dairy and sugar markets failed at the hands of special-interest minded Members of the Agriculture Committee. But if Boehner comes out forcefully in opposition to the bill, taxpayers could be spared from its awful provisions in favor of a one-year extension which would allow a presumably more fiscally responsible 2013 Congress to take it up.
Boehner is no stranger to Farm Bill opposition. He opposed the travesties that were the last two versions and has always expressed his distaste for the incredible amounts of wasteful spending that get packed into them. Despite the different makeup of this Congress, the bill they came up with is sadly no different. It eliminates direct payments made for certain commodity crops, but then plows virtually all of the savings into new subsidy programs to effectively guarantee revenue for farmers. The end result, when combined with an exploding food stamp program that has doubled in size since 2008, is a bill that costs upwards of $900 billion and does almost nothing to truly begin to wean farmers off of their sweet, sweet taxpayer money.
The bill is complicated, but the issue is simple. Farm income exceeded $100 billion last year. Average farm household income has consistently grown faster than the average American household, particularly post-1995 (when the "We swear, this is the Farm Bill to end all Farm Bills!" charade began in earnest). Fewer than one in 200 farms fail per year. Crop prices are at or near record highs. Meanwhile, our fiscal challenges have never been larger with a rapidly-increasing $15.8 trillion national debt. As a result, we have a more fiscally conservative House of Representatives than we've had in years.
One could scarcely dream up a better time to truly reform farm programs. Thankfully, it appears that Speaker Boehner realizes that this bill doesn't even come close to doing that. We should encourage him to do the right thing and shelve this monstrosity for good.0 Comments | Post a Comment | Sign up for NTU Action Alerts
The so-called “Marketplace Fairness Act," a bill to impose onerous tax collection requirements on remote retailers, is back again for another bite at taxpayers' wallets. We've alerted you to this threat timeand time again, and now proponents and their big-money backers are trying to sneak it through once more. Introduced as an amendment to S. 2237 (a small business tax bill) by Senators Mike Enzi (R-WY), Dick Durbin (D-IL), and Lamar Alexander (R-TN), the measure would add to the burden governments heap upon items purchased online while undermining vital taxpayer safeguards. The Marketplace Fairness Act would…
It is particularly odious and contradictory to attempt hanging this proposal on a bill purporting to assist small businesses. S. 2237 is problematic for taxpayers in its own right, but is made all the worse with an Amendment that fails on so many counts. As a practical matter, the paltry “small seller exemption” contained in the language means that numerous firms will become ensnared in a web of higher tax-compliance overhead costs. Businesses that could be contributing to a more robust economic recovery will instead squander resources extricating themselves from this trap, or worse, resign themselves to oblivion.
As a philosophical matter, the amendment treats the Internet and e-commerce as a sinister, alien force for small business, when the opposite is true. Where would brick-and-mortar retailers be, for example, without the convenience of online inventory control, or other “B2B” transactions that make management so much more efficient today? What losses would retailers suffer without the new markets for goods and services for which the Internet has provided the portal? How many millions of everyday citizens, who have created thriving online “mom and pop” proprietorships, would be denied the opportunities to provide for their families? To be clear: No Senator who claims to support taxpayers and small businesses should vote for this amendment. There are fairer, less burdensome ways to address any real “level playing field” issues in this area of commerce.
It's unclear as of now how the Senate will proceed on this amendment or the underlying small business tax bill, but rest assured that we'll be hammering away to make sure that well-financed lobbyists don't fleece taxpayers and businesses with this awful bill.
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The Left, the Right, and the Debate over Regulation
The term “crony capitalism” has a fairly long lineage, but lately it’s been uttered by supporters of both Occupy Wall Street and the Tea Party to denounce what they say is a distressingly cozy relationship between big government and some big businesses.
However, while both groups agree that the status quo of corporate welfare subsidies and difficulty of entry for new businesses are intolerable, their solutions could not be more different.
Occupy Wall Street has been consistent in calling for more government involvement in the private sector, from a mandatory 20 dollar-per-hour minimum wage to a regulatory crackdown on what they perceive as corporate opulence.
The Tea Party meanwhile, has called for almost exactly the opposite, citing government as the problem rather than the solution and seeking less interference from Washington.
A recently released report by senior research fellow Matthew Mitchell of the Mercatus Center at George Mason University, takes a closer look at the veiled relationship between the public and private sector, and makes some revealing new discoveries.
A common gripe from those on the political left is that without government regulation business will grow too powerful and form large monopolies, which leave the average consumer with less choice and higher prices. Thus, according to this economic philosophy, big business must be regulated into obedience.
Yet, Mitchell’s report debunks this myth by demonstrating how big business can actually profit from what he dubs “Regulatory Privilege:
“Though business leaders and politicians often speak of regulations as “burdensome” or “crushing,”…sometimes it can be a privilege to be regulated, especially if it hobbles one’s competition. This insight prompted consumer advocates Mark Green and Ralph Nader to declare in 1973 that “the verdict is nearly unanimous that economic regulation over rates, entry, mergers, and technology has been anticompetitive and wasteful,”and that “our unguided regulatory system undermines competition and entrenches monopoly at the public’s expense.”
Another claim of the left is that without more government regulation on all competitors, large businesses will dominate the marketplace and leave little room for new actors. However, Mitchell’s findings reveal just the opposite, demonstrating how regulation actually serves to keep out new competitors who are often unable to meet the many costly regulations:
“While barriers to entry impose costs on all firms, the costs are more burdensome to newer and smaller operators. This is why existing firms often favor regulations. University of Chicago economist George Stigler won the Nobel Prize in economics for showing that regulatory agencies are routinely “captured” and used by the firms they are supposed to be regulating.”
Last year, during the rise of Occupy Wall Street and the political scrambling to form a deficit reduction Super Committee, National Taxpayers Union partnered with U.S. PIRG and published a report titled Toward Common Ground. This non-partisan set of common sense proposals offered solutions that would appeal to both the political left and the political right, by focusing on issues such as ending wasteful subsidies, cutting unnecessary military spending, and enacting entitlement reform.
Although as we all know the Super Committee turned out not to be so “super” after all, if the United States is serious about revitalizing our dreary economic landscape, the left and the right will need to work together more often in changing outdated policies that no longer work. As demonstrated by Mitchell’s research and underscored by the NTU-U.S. PIRG report, restoring a vibrant and competitive economy will mean a commitment to eliminating wasteful “crony capitalism” policies. It will also entail adopting pro-growth reforms that reward companies based on their contribution to the economy rather than the number of lobbyists they can afford to hire to regulate their competitors out of business.
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In a confusing constitutional Rorschach test, Chief Justice Roberts determined that the individual mandate, which the Obama Administration had alternately argued was either a penalty or a tax (depending on the audience before which it was making the case), does indeed have the properties of a penalty to avoid the Anti-Injunction Act and is a tax for purposes of constitutionality.
Despite the Administration insisting again this week that the mandate is not a tax, this ruling means that federal and state bureaucracies can continue to figure out how to establish and implement the massive new entitlement program known ironically as the Affordable Care Act (ACA).
As Jerry Seinfeld’s character said:
Meanwhile, below is a selection of recent reports from the Government Accountability Office about how some of our current programs are doing. As I observed a few weeks ago, the GAO goes out of its way to find gentle language to point out what would otherwise be known as failure and incompetence. The studies often seem to imply that if only federal programs were granted sufficient resources and oversight, they could attain a state of perfection.
If the electorate permits the ACA to continue, I’m sure that it will provide fodder to the GAO for similar reports for years to come.0 Comments | Post a Comment | Sign up for NTU Action Alerts