Tag Archives: Spending

News

Obama is spending more on his campaign than he is collecting from donors

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From the Wall Street Journal.

Excerpt:

Last July, President Obama’s campaign announced that it had raised an average of $29 million in each of the previous three months for itself and the Democratic National Committee (DNC)… well below the $50 million a month needed to reach the campaign’s goal of a $1 billion war chest for the 2012 race.

[…]Through January, the president has raised an average of $24 million a month for his campaign and the DNC. Next week, the Obama campaign will release its February numbers, but the president is on track to be hundreds of millions of dollars shy of his original goal.

It’s not for lack of trying. Mr. Obama has already attended 103 fund-raisers, roughly one every three days since he kicked off his campaign last April (twice his predecessor’s pace).

The president faces other fund-raising challenges. For one, there are only so many times any candidate can go to New York or Hollywood or San Francisco for a $1 million fund-raiser. Team Obama is running through its easy money venues quickly.

For another, many of Mr. Obama’s 2008 donors are reluctant to give again. The Obama campaign itself reported that fewer than 7% of 2008 donors renewed their support in the first quarter of his re-election campaign. That’s about one-quarter to one-third of a typical renewal rate: In the first quarter of the Bush re-election campaign, for example, about 20% of the donors renewed their support.

[…]The final financial challenge facing Mr. Obama’s campaign is how fast it is burning through the cash it is raising. Compare the 2012 Obama re-election campaign with the 2004 Bush re-election campaign. Mr. Obama’s campaign spent 25% of what it raised in the second quarter of 2011, while Mr. Bush’s campaign spent only 9% in the second quarter of 2003. In the third quarter it was 46% for Obama versus 26% for Bush; for the fourth quarter it was 57% versus 40%. In January 2012 the Obama campaign spent 158% of what it raised, while the Bush campaign spent 60% in January 2004.

At the end of January, Team Obama had $91.7 million in cash in its coffers and those of the DNC. At the same point in 2004, the Bush campaign and Republican National Committee had $122 million in cash combined.

Compare that with Rick Santorum who is running a very frugal campaign which spends less and focuses instead on meeting with voters face-to-face. I find it surprising that Obama is struggling to find donors, though, given the amount of taxpayer money and favors that he’s favored his campaign fundraisers and “bundlers” with – e.g. government grants, political appointments, Wall Street bailouts, Obamacare waivers for unions, etc. Maybe even Democrats realize that buying votes while running the country into debt is not sustainable.

News

Canada’s tax revenues steady as they lowered corporate tax rates

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Canada: Corporate tax cuts, not stimulus spending
Canada: Corporate tax cuts, not stimulus spending

From the Daily Caller.

Excerpt:

The chart shows Canada’s federal corporate tax revenues as a share of gross domestic product (GDP) and the federal corporate tax rate. The tax rate plunged from 38 percent in 1980 to just 15 percent by 2012. Amazingly, there has been no obvious drop in tax revenues over the period.

Canadian corporate tax revenues have fluctuated, but the changes are correlated with economic growth, not the tax rate. In the late 1980s, a tax rate cut was followed by three years of stable revenues. In the early 1990s, a plunge in revenues was caused by a recession, and then in the late 1990s revenues soared as the economy grew.

In 2000, Canadian policymakers enacted another round of corporate tax rate cuts, which were phased in gradually. Corporate tax revenues initially dipped, but then they rebounded strongly in the late 2000s.

The rate cuts enacted in 2000 were projected to cause substantial revenue losses to the Canadian government. That projection indicates that the reform didn’t have much in the way of legislated loophole closing. But the chart shows that the positive taxpayer response to the rate cut was apparently so large that the government did not lose much, if any, revenue at all.

In 2009, Canada was dragged into a recession by the elephant economy next door, and that knocked the wind out of corporate tax revenues. However, it is remarkable that even with a recession and a tax rate under 20 percent, tax revenues as a share of GDP have been roughly as high in recent years as they were during the 1980s, when there was a much higher rate. Jason Clemens of the Macdonald-Laurier Institute notes that Canadian corporate tax revenues have been correlated with corporate profits, not the tax rate.

If a corporate tax rate is high, there is a “Laffer effect” when the rate is cut, meaning that the tax base expands so much that the government doesn’t lose any money. Estimates from Jack Mintz and other tax experts show that cutting corporate tax rates when they are above about 25 percent won’t lose governments any revenues over the long run.

This data is no surprise to supply siders – we expect this because of past experience with tax cuts.

Tax cuts: do they work?

Consider this article by the Cato Institute discusses how the Reagan tax cuts affected the unemployment rate.

Excerpt:

In 1980, President Carter and his supporters in the Congress and news media asked, “how can we afford” presidential candidate Ronald Reagan’s proposed tax cuts?

Mr. Reagan’s critics claimed the tax cuts would lead to more inflation and higher interest rates, while Mr. Reagan said tax cuts would lead to more economic growth and higher living standards. What happened? Inflation fell from 12.5 percent in 1980 to 3.9 percent in 1984, interest rates fell, and economic growth went from minus 0.2 percent in 1980 to plus 7.3 percent in 1984, and Mr. Reagan was re-elected in a landslide.

[…]Despite the fact that federal revenues have varied little (as a percentage of GDP) over the last 40 years, there has been an enormous variation in top tax rates. When Ronald Reagan took office, the top individual tax rate was 70 percent and by 1986 it was down to only 28 percent. All Americans received at least a 30 percent tax rate cut; yet federal tax revenues as a percent of GDP were almost unchanged during the Reagan presidency (from 18.9 percent in 1980 to 18.1 percent in 1988).

What did change, however, was the rate of economic growth, which was more than 50 percent higher for the seven years after the Reagan tax cuts compared with the previous seven years. This increase in economic growth, plus some reductions in tax credits and deductions, almost entirely offset the effect of the rate reductions. Rapid economic growth, unlike government spending programs, proved to be the most effective way to reduce unemployment and poverty, and create opportunity for the disadvantaged.

The federal revenues as a % of GDP were steady.

The conservative Heritage Foundation describes the effects of the Bush tax cuts.

Excerpt:

President Bush signed the first wave of tax cuts in 2001, cutting rates and providing tax relief for families by, for example, doubling of the child tax credit to $1,000.

At Congress’ insistence, the tax relief was initially phased in over many years, so the economy continued to lose jobs. In 2003, realizing its error, Congress made the earlier tax relief effective immediately. Congress also lowered tax rates on capital gains and dividends to encourage business investment, which had been lagging.

It was the then that the economy turned around. Within months of enactment, job growth shot up, eventually creating 8.1 million jobs through 2007. Tax revenues also increased after the Bush tax cuts, due to economic growth.

In 2003, capital gains tax rates were reduced. Rather than expand by 36% as the Congressional Budget Office projected before the tax cut, capital gains revenues more than doubled to $103 billion.

The CBO incorrectly calculated that the post-March 2003 tax cuts would lower 2006 revenues by $75 billion. Revenues for 2006 came in $47 billion above the pre-tax cut baseline.

Here’s what else happened after the 2003 tax cuts lowered the rates on income, capital gains and dividend taxes:

  • GDP grew at an annual rate of just 1.7% in the six quarters before the 2003 tax cuts. In the six quarters following the tax cuts, the growth rate was 4.1%.
  • The S&P 500 dropped 18% in the six quarters before the 2003 tax cuts but increased by 32% over the next six quarters.
  • The economy lost 267,000 jobs in the six quarters before the 2003 tax cuts. In the next six quarters, it added 307,000 jobs, followed by 5 million jobs in the next seven quarters.

The timing of the lower tax rates coincides almost exactly with the stark acceleration in the economy. Nor was this experience unique. The famous Clinton economic boom began when Congress passed legislation cutting spending and cutting the capital gains tax rate.

Tax revenues increased after the Bush tax cuts – due economic growth.

Those are the facts. That’s not what you hear in the media, but they are the facts.

News

“Problem families” cost British taxpayers £9 billion per year

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From the UK Telegraph. (H/T Dina)

Excerpt:

The majority of Britain’s “problem families”, some of whom are blamed for last summer’s riots, are fatherless, official research has found.

About 72,000 of the most troubled families, 60 per cent of those being targeted by the Government, are headed by a single mother. The rate is about triple the national average.

An official review into the causes of last summer’s riots is expected to highlight the lack of “male role models” for many of the youths arrested in the wake of the widespread disturbances.

The riot panel, set up to investigate the problem, is thought to have become frustrated that few details of the family backgrounds of problem children have previously been recorded, despite it being such an important influence on their behaviour.

The issue has now quickly risen up the Prime Minister’s agenda and Downing Street aides believe that family breakdown is one of the most urgent problems facing Britain.

Last night, Eric Pickles, the Communities and Local Government Secretary, said: “These troubled families are in total breakdown.

“The absence of a positive father figure is a huge problem and often the fathers who are present have severe drug and alcohol addictions and are not working.

“Clearly we want to work towards a situation where the fathers in these families provide stability, which means getting them back to work, so they can bring in money and be a positive role model to their children.”

It is understood that another “problem” identified among the troubled families is the large number of children. About 20 per cent of the 120,000 families have at least five children, which can lead to a lack of parental attention.

That’s about $15 billion U.S. dollars per year. The cost of family breakdown in the United States is $112 billion per year, and rising as the illegitimacy rate rises.

Reconstructing marriage

We need to stop the destruction of marriage to stop these runaway costs.

One of the ways to do that is to encourage men to marry. But the problem is that men without fathers in the home will not be as likely to marry, since they have never seen the way that a man operates in a marriage – as a protector, provider and moral/spiritual leader. Men need to see an example of mature, married love that is different from lust – an example of steady self-sacrificial service. The more we subsidize the destruction of marriage, the fewer younger men will understand what marriage really requires of men at the experiential level.

But there is another problem. Where does this money for social programs come from? It comes from businesses and taxpayers. In particular, a lot of it comes from working men and their employers. When business taxes and income taxes go up to pay for this problem, it is much harder for men to bear the financial costs of marriage.

Young women, take note: if you do not do your part to fight against divorce and unwed motherhood, then you cannot complain that men are not marrying. To get men to marry, society has to have in place a framework of laws, policies and economic incentives that make marriage natural and inviting to men. Taxing employers and incomes is not the right way to encourage men to marry. If we want men to be providers and to take responsibility for families, then we need to encourage them and make it easier for them to do those things.

Christians ought to care

Christians have an extra reason to be opposed to divorce and unwed motherhood – Christianity is “appropriated” by children most when there is a father in the home who is engaged as moral and spiritual leader. That means when the mother lets the father lead on moral and spiritual issues.

Excerpt:

In 1994 the Swiss carried out an extra survey that the researchers for our masters in Europe (I write from England) were happy to record. The question was asked to determine whether a person’s religion carried through to the next generation, and if so, why, or if not, why not. The result is dynamite. There is one critical factor. It is overwhelming, and it is this: It is the religious practice of the father of the family that, above all, determines the future attendance at or absence from church of the children.

If both father and mother attend regularly, 33 percent of their children will end up as regular churchgoers, and 41 percent will end up attending irregularly. Only a quarter of their children will end up not practicing at all. If the father is irregular and mother regular, only 3 percent of the children will subsequently become regulars themselves, while a further 59 percent will become irregulars. Thirty-eight percent will be lost.

If the father is non-practicing and mother regular, only 2 percent of children will become regular worshippers, and 37 percent will attend irregularly. Over 60 percent of their children will be lost completely to the church.

Let us look at the figures the other way round. What happens if the father is regular but the mother irregular or non-practicing? Extraordinarily, the percentage of children becoming regular goesupfrom 33 percent to 38 percent with the irregular mother and to 44 percent with the non-practicing, as if loyalty to father’s commitment grows in proportion to mother’s laxity, indifference, or hostility.

Women who are serious about serving God with their marriages should therefore get very comfortable with the idea with having a man in the home who will lead on moral and spiritual issues. I recommend that women prepare themselves by studying things like Christian apologetics, politics, economics, etc. so that they are able to test men on their knowledge of these things. There is simply no other way to know if a man can lead on moral and spiritual issues. The woman must study these things, and the woman must detect and select men who can lead. She must have enough of a developed, integrated Christian worldview in order to test his worldview. This is especially important if her own father does not have a well-developed worldview, since she will have to do more of the testing herself.

Christian women need to become comfortable with men who are solid on moral issues, especially when they can be persuasive using reason and evidence when articulating their views. Christian women need to become comfortable with men who are solid on exclusive truth claims, especially when they can be persuasive using reason and evidence when articulating their views. And the best way to get comfortable with men being bold and assertive on moral questions and truth questions is for women to study these things themselves.

Just as an example, I know a Christian woman who a year ago who was not using the standard arguments for God’s existence from physics. She sent me some pictures of her bookshelves and they are literally filled with apologetics books. She sent me a snippet of a conversation she is in with an atheist scientist and she is pounding him with peer-reviewed articles from science journals showing how the progress of science supports theism. Women need to be like that so that they are capable of recognizing and preferring men who will lead.

What church leaders don’t seem to get is that a man’s ability to lead on moral and spiritual issues is not strong enough if it is merely based on his “”faith” opinions. Moral and spiritual leadership is stronger when it’s grounded by studying the data and becoming familiar with the evidence pro and con. There is no shortcut to being a moral and spiritual leader through Bible reading, singing and praying. More is required. And more is required of women who expect to be able to be comfortable with such a man. Women need to study these things themselves, like my friend, so that they are able to recognize and prefer men who have those required skills.

To encourage marriage, we have to be practical. We have to think about dollars and cents. We have to think about incentives. We have to put ourselves in the place of men and ask ourselves: what does it take to make you commit? What are your needs? What are your fears? It’s not going to work to just order men around and spout slogans like “man up”. It’s a problem and it needs a rigorous engineering/economics approach to solve. We need leaders who think about problems as engineers and economists, not as charismatic speakers.