Tag Archives: Spending

News

UK government has “run out of money”

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From the UK Telegraph.

Excerpt:

In a stark warning ahead of next month’s Budget, the Chancellor said there was little the Coalition could do to stimulate the economy.

Mr Osborne made it clear that due to the parlous state of the public finances the best hope for economic growth was to encourage businesses to flourish and hire more workers.

“The British Government has run out of money because all the money was spent in the good years,” the Chancellor said. “The money and the investment and the jobs need to come from the private sector.”

[…]Mr Osborne is under severe pressure to boost growth, amid signs the economy is slipping back into a recession.

The Institute of Fiscal Studies has urged him to consider emergency tax cuts in the Budget to reduce the risk of a prolonged economic slump.

But the Chancellor yesterday said he would stand firm on his effort to balance the books by refusing to borrow money. “Any tax cut would have to be paid for,” Mr Osborne told Sky News. “In other words there would have to be a tax rise somewhere else or a spending reduction.

“In other words what we are not going to do in this Budget is borrow more money to either increase spending or cut taxes.”

What I thought was funny was the poll in the article. It had three choices. “Tax the rich more”, “Borrow more” and “We can’t afford tax cuts”. There was no option to cut spending! But maybe there is nothing that can be cut?

Look at this article from the UK Daily Mail. (H/T Dina)

Excerpt:

The Tavistock Clinic is based in an anonymous concrete building in North London. Once there, you have to go to the third floor to find the Orwellian-sounding Gender Identity Development Unit.

The unit received £1,042,000 in funding last year from the local healthcare Trust. In layman’s terms, it treats patients who believe they are ‘trapped in the wrong body’.

Few would associate such a place with children barely old enough to attend school.

But it emerged this week that a little boy called Zach Avery, just five years old, now wears his hair permanently in bunches after being assessed by ‘experts’ at the Tavistock and ‘coming out’ as a girl.

And Zach is not an isolated case.

Over the past year, 165 children have been referred to the clinic’s team of social workers, child psychotherapists, psychologists and psychiatrists.

Seven children under the age of five were officially diagnosed with Gender Identity Disorder (GID) — when a person is born one gender, but feels they are the other.

The UK government wants economic growth, but they are not willing to do what works – cut spending and cut taxes. They just can’t give up their social programs. It’s not even an option for them to consider.

News

Mitt Romney raised taxes by $740 million while he was governor of Massachusetts

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Deroy Murdock explains in this Scripps Howard News Service article.

Excerpt:

Hot on the heels of his eight-vote Iowa-caucus landslide, Willard Mitt Romney is crisscrossing New Hampshire before Tuesday’s key primary. Romney is masquerading as a limited-government, free-market executive from next-door Massachusetts. From the Golden Gate to the Granite State, voters should greet Romney’s impersonation with a quarry full of skepticism.

In fact, Romney increased taxes by $309 million, mainly on corporations. These tax hikes, described by Romney apologists as “loophole closures,” totaled $128 million in 2003, $95.5 in 2004, and $85 million in 2005. That final year, Romney proposed $170 million in higher business taxes, the Boston Globe reports. However, the Bay State’s liberal, Democratic legislature balked and only approved an $85 million increase.

“Tax rates on many corporations almost doubled because of legislation supported by Romney,” Boston Science Corporation chairman Peter Nicholas explained in the January 6, 2008 Boston Herald. Also, Romney raised the tax on subchapter S corporations owned by business trusts from 5.3 percent to 9.9 percent — an 85 percent hike.

“Romney went further than any other governor in trying to wring money out of corporations,” the Council on State Taxation’s Joseph Crosby complained.

Romney also created or increased fees by $432 million. He was not dragooned into this by greedy Democratic lawmakers; Romney himself proposed these items. In 2003 alone, Romney concocted or boosted 88 fees. Romney charged more for marriage licenses (from $6 to $12), gun registrations (from $25 to $75), a used-car sales tax ($10 million), gasoline deliveries ($60 million), real-estate transfers ($175 million), and more. Particularly obnoxious was Romney’s $10 fee per Certificate of Blindness. Romney also billed blind people $15 each for discount-travel ID cards.

While Romney can take credit for a $275 million capital-gains tax rebate, property-tax relief for seniors, and a two-day, tax-free shopping holiday, he also must take responsibility for signing $740.5 million in higher taxes, plus that $85 million in business taxes that he requested and legislators rejected.

“Romney did not even fight higher death-tax rates,” notes former California State Assembly Minority Whip Steve Baldwin, a Romney critic. “When the (Massachusetts) legislature considered this issue, Romney’s official position was ‘no position.’ This echoed Barack Obama’s ‘present’ votes in the Illinois State Senate.”

As Romney drained his constituents’ pockets, the Public Policy Institute of New York’s Cost of Doing Business Index rated Massachusetts in 2006 as America’s fourth costliest state in which to practice free enterprise. The Tax Foundation dropped Massachusetts from America’s 29th most business-friendly state to No. 36. The Tax Foundation also calculated that, under Romney, Massachusetts’ per-capita tax burden increased from 9.3 percent to 9.9 percent. In real dollars, the Romney-era per-capita tax burden grew by $1,175.71.

As if impoverishing his own taxpayers were not bad enough, Romney’s March 5, 2003 signature raised taxes on non-residents retroactive to that January 1. Perpetrating taxation without representation, Romney’s law declared that, “gross income derived from… any trade or business, including any employment,” would be taxable, “regardless of the taxpayer’s residence or domicile in the year it is received.”

Consequently, according to data furnished by the Massachusetts Department of Revenue, between 2002 and 2006, New Hampshire residents who work or do business in the Bay State shipped Massachusetts $95 million above what they paid when Romney arrived. The average tax paid by New Hampshirities to Massachusetts grew by 19.1 percent, from $2,392 in 2002 to $2,850 in 2006.

Romney has a pro-abortion record and pro-gay-marriage record. Not only did he pass Romneycare in Massachusetts, but now we know that he also raised taxes. Why is he running as a Republican? I don’t see anything in his record that would cause me to believe that he is a Republican.

You can see Mitt Romney explaining all of his liberal views in his own words in these videos.

Mitt Romney

Commentary

Does spending more money on public schools produce better students?

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Luis Woodhill in Forbes magazine.

Excerpt:

Accordingly, the “investment in education” that Obama wants more (and more, and more) of is actually “federal-government-directed investment in education”. When considering whether we really want more of this, it is important to remember that it was “federal-government-directed investment in energy” that gave us Solyndra, Ener1, and Beacon Power, and that it was “federal-government-directed investment in housing” that has cost taxpayers more than $150 billion in losses (thus far) at Fannie Mae and Freddie Mac.

So, how would we know if increased government “investment” in education was producing a return? We would see a steady rise in the ratio of GDP to “nonresidential produced assets” over time. Our GDP is produced by a combination of physical capital and human capital. Accordingly, if the economic value of our human capital were rising, the impact would show up in the numbers as increasing productivity of physical capital.

Now, here is the bad news. While total real ($2010) government spending on education increased almost 13-fold from 1951 to 2009, the measured GDP return on physical capital actually declined slightly, from 47.7% to 44.1%. This could not have happened if we were getting an appreciable economic return on our huge “investment” in education.

What follows is a “first approximation analysis”. The numbers could be done with more precision, but they are good enough to give us an idea of what the nation has been getting (actually, not getting) for its massive “investments” in education.

Assuming that about 25% of our total population is in school at any one time, average real (2010 dollars) government spending per student rose from $1,763 in 1951 to $12,209 in 2009. This is an increase of about 7 times. Assuming an average of 13 years of education per student (some go to college, some drop out of high school), this means that during this 58-year time period, we increased our real “investment” in the human capital represented by each student from $22,913 to $158,717.

Meanwhile, we have also been investing more in physical capital. Real nonresidential produced assets per worker increased from $79,278 in 1951 to $206,717 in 2009. So, each worker in 2009 had $127,439 more in physical capital and $135,804 more in educational “capital” to work with than he did in 1951.

Unfortunately, it is clear from the numbers that GDP tracks only physical assets, and not the sum of physical assets and educational “assets”. Excluding the GDP produced by the housing stock, the ratio of GDP to nonresidential produced assets has been essentially constant over the 59 years 1951–2009 (it has oscillated with the business cycle around a midpoint of 48.2%).

So, it appears that our massive “investments” in education have produced no measurable economic return. Should we be surprised by this? No. Average scores on standardized tests have not risen, despite the fact that we are “investing” seven times as much in real terms in each student than we did six decades ago. So, even by the measures used by the educational establishment, it is clear that the higher spending has not created any additional human capital.

The nation and its people would be much better off today if most of the additional “investment” in education that we have made over the past six decades had been used to create more nonresidential produced assets. GDP, real wages, and our standard of living would all be considerably higher.

Also, imagine if, instead of being given a 2009 education for $158,717, an average student were given a 1967-style education for about $58,000, and $100,000 in capital with which to start his working life. This would be sufficient to start any number of small businesses. Alternatively, if put in an IRA earning a real return of 6%, the $100,000 would grow to about $1.8 million over 50 years.

The huge government “investments” made in education over the past 50 years have produced little more than “Solyndras in the classroom”. They have enriched teachers unions and other rent-seekers, but have added little or nothing to the economic prospects of students. America does not need more such “investment”.

There is no reason to believe that having government spend our money will produce a better return than letting us keep our money and then letting us spending it on schools that actually perform.