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Polls

U.S. President Donald Trump speaks in support of Republican congressional candidate Rick Saccone during a Make America Great Again rally in Moon Township, Pennsylvania, U.S., March 10, 2018. (Photo: Reuters)

U.S. President Donald Trump speaks in support of Republican congressional candidate Rick Saccone during a Make America Great Again rally in Moon Township, Pennsylvania, U.S., March 10, 2018. (Photo: Reuters)

While the debate over tariffs imposed by President Donald Trump last week rages on in Washington, Americans are more unified over whether it’s more important to protect the country’s manufacturing base over lower consumer costs.

A new Rasmussen Reports national telephone and online survey finds a whopping 89% of American adults believe it is at least somewhat important for the U.S. to have a major manufacturing and industrial base, including 63% who believe it is “Very Important.” Only 8% say it is not very or “Not At All” Important to keep a manufacturing base at home.

When asked if it is “more important to keep manufacturing jobs in the United States or to keep prices low for American consumers,” a dominant 68% said it’s more important to keep manufacturing jobs in the U.S. and only 20% think it’s more important to “keep prices low for American consumers.”

Last week, President Trump announced a 25% tariff on imported steel and a 10% tariff on imported aluminum.

The survey of 1,000 American adults in the U.S. nationwide was conducted on March 5 – 6, 2018 by Rasmussen Reports. The margin of sampling error is +/- 3 percentage points with a 95% level of confidence.

Americans are unified over whether it's more

Policy

Pedestrians walk past the International Monetary Fund (IMF) headquarters’ complex in Washington Sunday, May 2, 2010. (Photo: AP)

Pedestrians walk past the International Monetary Fund (IMF) headquarters’ complex in Washington Sunday, May 2, 2010. (Photo: AP)

I’m not a fan of international bureaucracies, but they’re not universally bad. Yes, we almost always get a bad policy agenda from the left-leaning political appointees who run these organizations.

But it’s also true that the professional economists at these bureaucracies oftentimes produce solid research. A good example is the new study of the American fiscal system by three economists at the International Monetary Fund (IMF).

They start with an observation that should be uncontroversial, but is nonetheless surprising given the tendency of the IMF’s leadership to advocate more taxes.

The consensus is that reducing distortionary taxes on labor and capital income can stimulate economic activity by encouraging an increase in labor supply and higher savings. Indeed, the empirical literature on tax multipliers is vast and points to measurable effects of reducing taxes on output and employment.

I’m delighted by these two sentences. Makes me wonder why the political types who run the IMF overlook these basic insights when they’re bullying governments into enacting higher tax rates!

But let’s set that aside and look at the specific findings in this report. Here’s what the IMF tried to calculate.

We simulate three types of tax policy changes (i) A “middle-class tax cut” which reduces the effective tax rates for households earning between 0.5 to 4 times the median income and is offset by lower government spending; (ii) A “middle-class tax cut” and an EITC expansion that is fully financed by an increase in consumption taxes; (iii) tax cut for high income groups that is also combined with an EITC expansion and financed by a higher consumption tax.

Since I’ve pointed out that not all tax cuts are created equal, I think this kind of research can be very helpful.

Here are the core findings from the IMF’s analysis.

The model generates positive effects on growth, consumption and investment that are broadly in line with the recent empirical literature on PIT multipliers. Despite the positive macro response, supply side effects are never strong enough to prevent cuts from being revenue losing (i.e., tax cuts do not “pay for themselves”). …A tax cut for the middle-class, financed from a lump-sum reduction in government spending, results in a loss of revenues of 0.8 percent of GDP but raises the steady state GDP by just under 1 percent after 5 years (i.e., a personal income tax multiplier of 1.1). …growth effects are smaller when lower personal income taxes are paid for with a VAT. …Tax cuts for higher income groups tend to have a stronger aggregate impact than tax cuts for the middle class. Indeed, in the simple case where the tax cuts are paid for by lump sum cuts in government spending, the personal income tax multiplier is around 3. … tax cuts that are incident on high income households increase income polarization.

This all makes sense. Lower tax rates are good for growth, particularly if offset by reductions in the burden of government spending.

And since lower tax rates are only self-financing in very rare circumstances, I have no problem with the conclusion about lower revenues.

Indeed, the concluding section about “income polarization” was the only part of the above excerpt that rubbed me the wrong way. And even then, I’m only irked because of the implication that lower tax rates might be a bad idea if the rich get richer faster than the poor get richer.

While I like the overall findings, I want to focus on two details from the study.

First, let’s look at the results for middle-class tax cuts. The IMF researchers looked at two versions, with one tax cut financed by lower spending and the other tax cut financed by higher consumption taxation.

As you can see from these two charts, you get more growth and higher wages when you simultaneously reduce taxes and spending.

 

Second, let’s look at the IMF’s comparison of middle-class tax cuts and tax cuts for high-income people. The conclusion is that you get more bang-for-the-buck when lowering tax rates at the top.

…there are larger growth effects when the tax cut is incident on the higher income groups. The reasons behind this are two-fold: First, the top quintile responds to lower taxes by saving more which, in the closed economy version of the model, leads to more capital formation and a decline in the equilibrium real interest rate. Second, those receiving a reduction in their tax rate supply more high-skilled labor which helps boost output.

By the way, I should hasten to add that this isn’t an argument against middle-class tax relief. As far as I’m concerned, all taxpayers are sending too much money to politicians.

I’m merely highlighting this analysis because some types of tax cuts have larger growth effects. For what it’s worth, I’m not even sure I agree with the IMF’s analysis of why lower tax rates on the rich produce more growth. I suspect the main reason for the stronger results is that high-income taxpayers have much greater ability to change their behavior in response to altered incentives.

In any event, here’s the IMF’s comparison of the two types of tax cuts and what happens to output, consumption, and investment.

 

P.S. Since we’re discussing the occasional good work of international bureaucracies, here’s my favorite World Bank study and here’s my favorite OECD study.

A new study from the International Monetary

Policy

The Swiss people are normally very sensible when asked to vote in national referendums. Here are some recent results.

Though my favorite referendum result occurred several years before I started writing on this site.

Given all these results, you won’t be surprised to learn that Switzerland is near the top in rankings of economic freedom, trailing only Hong Kong, Singapore, and New Zealand.

But this does not mean that Switzerland is a libertarian nation. At least not in an ideological sense. And we have two new referendum results that underscore this point.

This past weekend, Swiss voters had an opportunity to get rid of the central government’s value-added tax, personal income tax, and corporate income tax.

Ending those taxes would be a libertarian fantasy, but the initiative to extend the levies was easily approved.

More than 84% of voters have renewed the government’s right to tax its citizens and companies for another 15 years. This is a unique feature of Switzerland’s political system of direct democracy and federalism.  …rejection would have been a nightmare for the government. …said Finance Minister Ueli Maurer in January. “If voters were to say no, the Swiss government wouldn’t have enough funds and there’s no way we could find another source of revenue or introduce spending cuts of the same order.”

Voters were swayed by arguments that a no vote would cause too much fiscal disruption. Slashing the central government’s budget by 60 percent might appeal to ideological libertarians, but it didn’t fly with don’t-rock-the-boat Swiss voters.

The direct federal tax and the sales tax together contributed about two-thirds of the Swiss central government’s budget, bringing in around 43.5 billion Swiss francs ($44.25 billion) in 2016. …Should voters reject the measure, the government would have to slash spending by more than 60 percent practically overnight or find new sources of revenue, Maurer told reporters.

Here’s a pie chart showing the revenue sources for the central government.

 

I would have voted no, of course, and I wish more Swiss voters had lined up against the initiative.

Not because I would have thought that an immediate 60-percent reduction in the size of the central government was feasible. But a larger share of no votes at least would have sent a signal to politicians in Bern that frugality is a good idea.

There was another referendum over the weekend that also produced an unfortunate result. Swiss voters approved continuing subsidies for state-run media.

The Swiss Broadcasting Corporation, Switzerland’s public broadcaster is largely funded by a broadcasting fee. This fee, known colloquially as Billag, the name of the agency that collects it, is paid by most companies and essentially every household. The No Billag initiative, is a bid to do away with fee. …the No Billag vote was rejected by 71.6% of voters.

The margin of defeat is especially disappointing since libertarians actively campaigned for this initiative.

Switzerland, like many European nations, has certain television and radio channels that are run by the government. …Together with other classical liberals in Switzerland, Frédéric Jollien is fighting against the royalties imposed by the government for media consumption. 450 Swiss Francs, the equivalent of €382 or $456, is the annual fee that consumers are required to pay, regardless if they want state-run TV and radio channels or not. …Journalists (who, by the way, are exempt from paying this fee) are releasing heavy verbal fire on the campaigners. They claim it would cause massive unemployment in the media sector, that it is anti-democratic, and that it would enable big foreign companies to take over the Swiss market.

Alas, the fear campaign succeeded.

But I hasten to add that this doesn’t mean Switzerland is turning towards statism. I suspect the real story is that the Swiss are content with the status quo.

And the status quo (especially by European standards) is a practical form of libertarianism.

Here’s some of what Dan Hannan wrote last year.

I have always loved Switzerland…its devolved decision-making, its entrenched Euroskepticism. …I am a Helvetophile for many of the same reasons as America’s Founders. James Madison was fascinated by the way Switzerland had “no concentered authority, the Diets being only a Congress of Delegates from some or all of the Cantons.”…George Mason was entranced by the militia system: “Every Husbandman will be quickly converted into a Soldier, when he knows & feels that he is to fight for his own. It is this which preserves the Freedom and Independence of the Swiss Cantons, in the midst of the most powerful Nations.” …Switzerland has stubbornly retained its sovereignty, despite being surrounded by the EU. …Swiss democracy is direct, decentralized and devolved. Most fiscal decisions are taken locally. Result? Swiss voters are the happiest in Europe, their economy is the freest, and their state budget the smallest.

And let’s not forget that Switzerland is still a bright spot on gun rights.

In February 2011, Swiss citizens voted in a referendum that called for a national gun registry and for firearms owned by members of the military to be stored in public arsenals. …Hermann Suter, who at the time was vice president of the Swiss gun-rights group Pro Tell, told the BBC then. “The gun at home is the best way to avoid dictatorships—only dictators take arms away from the citizens.” Apparently many of his fellow Swiss agreed. The referendum was easily defeated. Gun ownership in the country has deep historic roots… guns are popular… Children as young as 12 are taught how to shoot…and are encouraged to participate in highly popular target-shooting competitions. The country’s cultural attachment to firearms resembles America’s in some ways…it has the third-highest rate of private gun ownership in the world… The Swiss Defense Ministry estimates that there are 2 million privately owned weapons in the country of 8.3 million people.

Yet there’s almost no gun-related crime.

Switzerland has a low rate of gun crime, and hasn’t seen a mass shooting since 2001.

And let’s not forget that the fiscal burden of government in Switzerland is comparatively modest.

Not by libertarian standards. Not by historical standards.

But compared to other European nations, Switzerland is a fiscal Shangi-La. The tax burden is lower, and spending consumes a smaller share of economic output.

And this translates into lower levels of red ink.

The people of Switzerland are normally practical

Policy

File: The $4 trillion U.S. federal budget proposed by Barack Obama in 2016. (Photo: Reuters)

File: The $4 trillion U.S. federal budget proposed by Barack Obama in 2016. (Photo: Reuters)

Writing about federal spending last week, I shared five charts illustrating how the process works and what’s causing America’s fiscal problems.

Most important, I showed that the ever-increasing burden of federal spending is almost entirely the result of domestic spending increasing much faster than what would be needed to keep pace with inflation.

And when I further sliced and diced the numbers, I showed that outlays for entitlements (programs such as Social Security, Medicare, Medicaid, and ObamaCare) were the real problem.

Let’s elaborate.

John Cogan, writing for the Wall Street Journal, summarizes our current predicament.

Since the end of World War II, federal tax revenue has grown 15% faster than national income—while federal spending has grown 50% faster. …all—yes, all—of the increase in federal spending relative to GDP over the past seven decades is attributable to entitlement spending. Since the late 1940s, entitlement claims on the nation’s output of goods and services have risen from less than 4% to 14%. …If you’re seeking the reason for the federal government’s chronic budget deficits and crushing national debt, look no further than entitlement programs. …entitlement spending accounts for nearly two-thirds of federal spending. …What about the future? Social Security and Medicare expenditures are accelerating now that baby boomers have begun to collect their government-financed retirement and health-care benefits. If left unchecked, these programs will push government spending to levels never seen during peacetime. Financing this spending will require either record levels of taxation or debt.

Here’s a chart from his column. Only instead of looking at inflation-adjusted growth of past spending, he looks at what will happen to future entitlement spending, measured as a share of economic output.

 

And he concludes with a very dismal point.

…restraint is not possible without presidential leadership. Unfortunately, President Trump has failed to step up.

I largely agree. Trump has nominally endorsed some reforms, but the White House hasn’t expended the slightest bit of effort to fix any of the entitlement programs.

Now let’s see what another expert has to say on the topic. Brian Riedl of the Manhattan Institute paints a rather gloomy picture in an article for National Review.

…the $82 trillion avalanche of Social Security and Medicare deficits that will come over the next three decades elicits a collective shrug. Future historians — and taxpayers — are unlikely to forgive our casual indifference to what has been called “the most predictable economic crisis in history.” …Between 2008 and 2030, 74 million Americans born between 1946 and 1964 — or 10,000 per day — will retire into Social Security and Medicare. And despite trust-fund accounting games, all spending will be financed by current taxpayers. That was all right in 1960, when five workers supported each retiree. The ratio has since fallen below three-to-one today, on its way to two-to-one by the 2030s. …These demographic challenges are worsened by rising health-care costs and repeated benefit expansions from Congress. Today’s typical retiring couple has paid $140,000 into Medicare and will receive $420,000 in benefits (in net present value)… Most Social Security recipients also come out ahead. In other words, seniors are not merely getting back what they paid in. …the spending avalanche has already begun. Since 2008 — when the first Baby Boomers qualified for early retirement — Social Security and Medicare have accounted for 72 percent of all inflation-adjusted federal-spending growth (with other health entitlements responsible for the rest). …

Brian speculates on what will happen if politicians kick the can down the road.

…something has to give. Will it be responsible policy changes now, or a Greek-style crisis of debt and taxes later? …Restructuring cannot wait. Every year of delay sees 4 million more Baby Boomers retire and get locked into benefits that will be difficult to alter… Unless Washington reins in Social Security and Medicare, no tax cuts can be sustained over the long run. Ultimately, the math always wins. …Frédéric Bastiat long ago observed that “government is the great fiction through which everybody endeavors to live at the expense of everybody else.” Reality will soon fall like an anvil on Generation X and Millennials, as they find themselves on the wrong side of the largest intergenerational wealth transfer in world history.

Not exactly a cause for optimism!

Last but not least, Charles Hughes writes on the looming entitlement crisis for E21.

Medicare and Social Security already account for roughly two-fifths of all federal outlays, and they will account for a growing share of the federal budget over the coming decade. …Entitlement spending growth is a major reason that budget deficits are projected to surge over the next decade. …The unsustainable nature of these programs face mean that some reforms will have to be implemented: the only questions are when and what kind of changes will be made. The longer these reforms are put off, the inevitable changes will by necessity be larger and more abrupt. …Without real reform, the important task of placing entitlement programs back on a sustainable trajectory will be left for later generations—at which point the country will be farther down this unsustainable path.

By the way, it’s not just libertarians and conservatives who recognize there is a problem.

There have been several proposals from centrists and bipartisan groups to address the problem, such as the Simpson-Bowles plan, the Debt Reduction Task Force, and Obama’s Fiscal Commission.

For what it’s worth, I’m not a big fan of these initiatives since they include big tax increases. And oftentimes, they even propose the wrong kind of entitlement reform.

Heck, even folks on the left recognize there’s a problem. Paul Krugman correctly notes that America is facing a massive demographic shift that will lead to much higher levels of spending. And he admits that entitlement spending is driving the budget further into the red. That’s a welcome acknowledgement of reality.

Sadly, he concludes that we should somehow fix this spending problem with tax hikes.

That hasn’t worked for Europe, though, so it’s silly to think that same tax-and-spend approach will work for the United States.

I’ll close by also offering some friendly criticism of conservatives and libertarians. If you read what Cogan, Riedl, and Hughes wrote, they all stated that entitlement programs were a problem in part because they would produce rising levels of red ink.

It’s certainly true that deficits and debt will increase in the absence of genuine entitlement reform, but what irks me about this rhetoric is that a focus on red ink might lead some people to conclude that rising levels of entitlements somehow wouldn’t be a problem if matched by big tax hikes.

Wrong. Tax-financed spending diverts resources from the private economy, just as debt-financed spending diverts resources from the private economy.

In other words, the real problem is spending, not how it’s financed.

Outlays for entitlements programs such as Social Security, Medicare, Medicaid,

Opinion

Bernie Sanders stands at the podium on stage during a walk through before the start of the Democratic National Convention in Philadelphia, Pennsylvania on July 25, 2016. (Photo: SS)

Bernie Sanders stands at the podium on stage during a walk through before the start of the Democratic National Convention in Philadelphia, Pennsylvania on July 25, 2016. (Photo: SS)

Not all leftists are alike.

I speculated a couple of years ago that there were four types of statists and put them on a spectrum. I put “rational leftists” at one end. If you wanted to pick a nation that represents this mindset, think Sweden. Nice, civilized, market-oriented, but plenty of redistribution.

On the other end of the spectrum were three less-palatable types.

  1. The “totalitarians,” which means a dictatorial state-run economy, as represented by the Soviet Union and China.
  2. The “socialists,” a democratically elected form of a state-run economy, as represented by post-WWII United Kingdom.
  3. The “crazies,” which I confess is a catch-all category to capture visceral, unthinking, and punitive intervention.

And for that final category, I listed Bernie Sanders and Greece as representatives.

And if you want to know why I listed Sanders, here’s some of Jeffrey Tucker’s FEE column from 2015.

Bernie Sanders, that sweet old socialist who we would have to invent if he didn’t exist in real life, elicited guffaws all over the Internet with his now famous comment about deodorant choice. “You don’t necessarily need a choice of 23 underarm spray deodorants or of 18 different pairs of sneakers,” he said, “when children are hungry in this country.” …The underlying theory here is that the proliferation of deodorant and tennis shoes come at the expense of food for the poor. There is only a certain amount of wealth in the world, this thinking goes.

In practical terms, Sanders must think the world is zero-sum. I can’t be rich unless you are poor, and vice-versa.

Tucker explains that this isn’t true. Or, to be more accurate, it’s not true when markets are allowed to function.

That’s what was so captivating about the Industrial Revolution. All kinds of people were suddenly getting richer, and not by grabbing other people’s stuff. Wealth seemed to be actually expanding. ..Adam Smith…patiently observed how expansion of the division of labor, innovation, and trade — all based on secure ownership titles and free association — were working together to make everyone better off. This was not a zero-sum world. We escaped that fate long ago. …This was the single most marvelous discovery that economics made.

But because of his visceral disdain for markets, Sanders doesn’t trust free people to make decisions.

People who talk like Sanders imagine themselves in the position of dictators, deciding what social priorities ought to be. …What if they got their way? They would have to override billions of decentralized decisions. They would have to reject the judgements of millions of balance sheets. They would have to use massive force to prevent people from inventing, making bargains, striking deals, and buying and selling. It really does mean the end of freedom… It is for this reason that socialist central planning has brought reduced standards of living, poverty, and economic stagnation and chaos everywhere it has been tried.

And Sanders isn’t the only crazy.

Jeremy Corbyn’s economic views are also astoundingly bad, as explained by Andrew McKie for CapX.

…no matter how clueless and unrealistic the Labour leader is when it comes to Europe, that’s nothing compared with his failure to come to grips with the real world. Corbyn said: “I do not agree with or accept the idea there has to be competition in mail delivery. After all, we all have one letterbox, and it is much more efficient to have one postal delivery person coming down the street rather than three or four from different or competing companies.” …Corbyn isn’t just saying that Labour plans to renationalise the Royal Mail. …wave goodbye to Amazon Prime and next-day delivery from Asos, and say so long to FedEx, DHL or UPS and their guarantees. As for innovations that have just arrived or are in the works, such as universal same-day delivery and the use of drones, forget it.

McKie delves into the many reasons why Corbyn is so misguided.

The extraordinary point is that Corbyn really seems to think that, if there’s one of something, it’s neither realistic nor desirable that there should be any alternative on offer. Heaven forbid that you might think that you could make a choice, or that anyone else might provide a better, a cheaper or – in any way at all – a different service. …Corbyn’s “one-size fits all” approach ought to seem ridiculous, even if no one would laugh if they had to live in a country that operated that way. But he’s not joking; he really seems to think that all the reforms, the improvements in living standards, the economic growth and consumer choice of the last 40 years were a mistake, and that the state-run companies of Britain (then known as ‘the sick man of Europe”) were better. He doesn’t seem to realise that it is exactly the market – the existence of choice and competition – which led to those improvements, which drove innovation, drove up living standards, and drove down prices.

Everything Tucker and McKie says is spot on.

My two cents on this issue is that Sanders and Corbyn are guilty of two huge mistakes.

  • First, they think the economy is a fixed pie, which is laughably false. Just watch these videos by Don Boudreaux and Deirdre McCloskey. The simple lesson is that everyone can become richer at the same time. At least if they have decent policy.
  • Second, they have no idea of the valuable role of “creative destruction” in encouraging ever-more efficient and less costly ways of generating ever-more valuable goods and services. Watch this video and this video for more details.

Statism-Spectrum-Ideological-SpectrumYou don’t need to be an economist to understand why Sanders and Corbyn are wrong. Normal people can look at how fast various nations grow (or don’t grow) and draw the appropriate conclusions.

The economic illiteracy of Bernie Sanders and

Politics

Senate Minority Leader Chuck Schumer (D-NY) speaks after the Democratic policy luncheon on Capitol Hill in Washington, U.S., January 9, 2018. (Photo: Reuters)

Senate Minority Leader Chuck Schumer (D-NY) speaks after the Democratic policy luncheon on Capitol Hill in Washington, U.S., January 9, 2018. (Photo: Reuters)

Defending nearly a dozen seats in states President Donald Trump carried in November of 2016, Senate Democrats intend to run on a massive tax hike and $1 trillion in new spending.

This week, Congressional Democrats released a detailed plan to increase taxes and spend that money on infrastructure if voters give them back control of the U.S. House of Representatives and the U.S. Senate in the 2018 midterm elections. After a year of arguing about the debt and 9 years of not caring about it, they proposed Stimulus 2.0.

Senate Minority Leader Chuck Schumer, D-N.Y., released the plan with Senators Patrick Leahy, D-Vt., Ron Wyden, D-Oreg., Bill Nelson, D-Fla., Tom Carper, D-Del., Debbie Stabenow, D-Mich., Maria Cantwell, D-Wa., Bernie Sanders, I/D/Socialist-Vt., and Sherrod Brown, D-Ohio.

Three of those senators are up for reelection in states President Trump won — Senators Nelson, Stabenow and Brown.

The plan was billed as a reversal of the “tax giveaways to corporations and the wealthy” in the Tax Cuts and Jobs Act (TCJA), the first overhaul to the U.S. tax code in 31 years. The president’s signature tax reform bill didn’t receive a single Democratic vote and is now supported by the majority of Americans, with larger margins among voters in battleground states.

As People’s Pundit Daily (PPD) and others reported, the TCJA has resulted in millions of Americans receiving bonuses, wage increases and other related benefits. Roughly 85% of American workers received a cut to their tax burden and 90% received more money in their paychecks, while less than 5% saw a hike. The latter group is mostly wealthy, higher-earning taxpayers.

The Democratic plan would increase the top marginal income tax rate to 39.6%, up from 37%. Unfortunately, that tax hike would also directly hit 30 million small and mid-sized sole proprietorships, partnerships, Subchapter-S corporations and LLCs. These companies pay their business taxes on their owners’ 1040 personal tax returns.

The ADP National Employment Report released this week showed small- and medium-sized businesses picking up the pace in hiring. The ADP and the Employment Situation report released Friday by the Labor Department via the Bureau of Labor Statistics (BLS) both crushed expectations.

Small Business Optimism, the Survey of Consumers and the Consumer Confidence Index are soaring, with panel respondents all citing the TCJA (here, here and here).

In response, the Democratic plan is to re-raise the corporate tax rate to what they called a “competitive” 25%, which they said would prevent “a massive windfall to special interests” and “CEO bonuses being prioritized over hiring new employees and increasing workers’ pay.”

In truth, Pfizer Inc (NYSE: PFE) and many other corporations specifically excluded chief executive officers and upper level positions from tax reform-related bonuses and benefits.

Prior to the TCJA, the U.S. suffered under the highest corporate income tax in the developed world. Republicans in Congress cut the U.S. corporate rate from 35% to 21%, which research shows does result in higher wages.

Research from the liberal Organization for Economic Cooperation and Development (OECD) showed the U.S. corporate tax rate was well above the average for the developed world.

OECD Global Corporate Tax Rates

As CATO economist Dan Mitchell explained, OECD research also shows cutting the corporate tax rate resulted in higher wages for workers. The Personal Income and Outlays report from the Bureau of Economic Analysis (BEA) confirmed the near-immediate rise in wages due to the TCJA.

Congressional Democrats said reversing the “trickle-down economic policy” of corporate tax cuts would raise $359 billion in revenue to spend on infrastructure. However, Chris Edwards of the Cato Institute reviewed fifty years of data for industrialized nations and ascertained that lower tax rates are associated with rising revenue.

Democrats also propose to bring back the alternative minimum tax (AMT), which would impact 4 million U.S. families. The TCJA repealed the heavy tax burden for roughly 99% of those previously impacted. The AMT disproportionately hit two-income, white collar families with children in blue states such as California, New York and New Jersey.

In the TCJA, Republicans doubled the exemption for the “death tax,” which Democrats refer to as the more palatable estate tax, from $5.5 million to $11 million for individuals and a $22 million for married couples. Democrats plan to bring back the death tax, though between 6 to 7 in 10 Americans oppose it, to raise another $83 billion in revenues over 10 years.

Nevertheless, the Democratic plan to spend hypothetical revenue raised from tax hikes on an infrastructure plan would cost taxpayers more than $1 trillion. Here is how it brakes down:

– $140 Billion to Repair America’s Roads & Bridges

– $10 Billion to Expand the TIGER Program

– $115 Billion to Modernize America’s Water & Sewer Systems

– $115 Billion to Repair & Improve Public Transportation

– $50 Billion to Modernize and Improve the Safety of America’s Rail Infrastructure

– $40 Billion for a new Vital Infrastructure Program

– $30 Billion to Revitalize Main Street & Promote Innovative Transportation

– $62 Billion for Neighborhood Revitalization, Lead Remediation, & Affordable Housing

– $50 Billion to Rebuild America’s Schools

– $30 Billion to Modernize America’s Ports & Waterways

– $40 Billion to Improve America’s Airports & Airspace

– $25 Billion to Build More Resilient Communities

– $80 Billion to Bring Innovation to America’s Energy Grid & Promote Clean Energy

– $40 Billion to Provide Universal High-Speed Internet

– $15 Billion for Construction on America’s Public Lands

– $10 Billion for Tribal Infrastructure

– $10 Billion to Address the Construction Backlog at VA Healthcare Facilities

– $20 Billion in Innovative Financing Tools

– $140 Billion to Ensure the Solvency of the Highway Trust Fund for the next 10 years

But there’s another potential and major problem with their infrastructure plan aside from the loss in revenue that would result from tax avoidance behavior. Put simply, the federal government doesn’t have the ability or legal authority to make the very necessary repairs to America’s infrastructure often cited.

By comparison, President Trump unveiled a $1.5 trillion proposal to rebuild the nation’s infrastructure through public-private partnerships. However, it doesn’t call for Congress to write a check for that amount.

The plan instead calls for $200 billion in federal funds to spur at least $1.5 trillion in infrastructure investments with partners at the state, local, tribal and private level. Even if the federal government could fund all the projects the Democrats propose, they don’t have the legal authority to go it on their own.

For instance, the American Society of Civil Engineers (ASCE) gave U.S. infrastructure a cumulative D+ GPA in 2017. With 90,580 dams in the country having an average age of 56-years-old, the sub-sector received a D grade. By 2025, 7 out of 10 dams in the U.S. will be over 50 years old.

It is estimated that it will require an investment of nearly $45 billion to repair critical, aging, high-hazard potential dams. But according to the Association of State Dam Safety Officials, only 14% of dams in the U.S. are owned or regulated by government agencies.

Without a public-private partnership program such as the one proposed by President Trump, the nation’s dams and other sub-sector repairs have no hope for repair.

Neither the Democratic National Committee (DNC), the Democratic Congressional Campaign Committee (DCCC) nor the office of the minority leader responded to a request for comment.

Defending nearly a dozen seats in states

Politics

In this March 3, 2016 file photo, RNC Chairwoman Ronna McDaniel, then the Michigan Republican Party chair, speaks before a Republican presidential primary debate in Detroit. (Photo: AP)

In this March 3, 2016 file photo, RNC Chairwoman Ronna McDaniel, then the Michigan Republican Party chair, speaks before a Republican presidential primary debate in Detroit. (Photo: AP)

Republican National Committee (RNC) Chair Ronna McDaniel said Democrat National Committee (DNC) Chair Tom Perez “must address” Deputy Chair Keith Ellison’s ties to Louis Farrakhan.

The head of the RNC called on Mr. Perez to hold his number two accountable for a “long pattern of lies” surrounding his relationship with the racist and anti-Semitic leader of the Nation of Islam.

“Keith Ellison’s long pattern of lies about his ongoing relationship with Louis Farrakhan, who the Anti-Defamation League calls ‘America’s leading anti-Semite,’ has put a stain on the Democrat Party,” Chairwoman McDaniel said in a statement. “Anti-Semitism has no place in American politics, Tom Perez must address this issue.”

As People’s Pundit Daily (PPD) reported, the controversial and radical religious leader confirmed Deputy Chair Ellison, D-Minn., was in fact a member of the anti-semitic group and only left the Nation of Islam because he wanted to run for office.

“Keith Ellison… You ain’t got a picture of Keith? Well, let me talk about him. Now Keith was in the Nation in 1995,” Mr. Farrakhan said in a keynote address last weekend, which drew responses of “that’s right!” from the crowd. “He was selling the Final Call newspaper. Beautiful brother. And, being in Minnesota, he wants to help his community. He’s a lawyer, so he wants to help his community. So, he wants to be a congressman.”

The Final Call is a newspaper published in Chicago. It was founded in 1979 by Minister Farrakhan and serves as the official newspaper of the Nation of Islam. It is also the official communications, or propaganda organ of the Nation, which is used to recruit young college students.

Rep. Ellison, who ran for DNC chair and now serves as the deputy chair, has repeatedly and even recently denied having any membership in or relationship with the Nation or Mr. Farrakhan.

However, there are widespread reports to the contrary and, in the past, Mr. Ellison has defended the racist and anti-Semitic leader, whom he once called a “role model.”

The Anti-Defamation League (ADL), which originally backed him over Mr. Perez, bailed on his bid to be the new DNC chair after never before heard audio surfaced in which he made questionable comments about the state of Israel. However, big name Democrats in the U.S. House and the U.S. Senate did not abandon him, nor did the grassroots base.

He was initially supported by Senators Bernie Sanders, D/S/I-Vt., Elizabeth Warren, D-Mass., and even Senate Minority Leader Chuck Schumer, D-N.Y., despite his Jewish heritage.

Now, new revelations have surfaced indicating Rep. Ellison continued to have a relationship with Mr. Farrakhan even after he joined the U.S. Congress. His office has attacked the media for asking questions about the meetings between the two in 2013 and 2015. The Wall Street Journal reported a dinner meeting took place in September 2013.

Mr. Farrakhan later claimed that Rep. Ellison was one of three Democratic congressmen who attended a private dinner with him and with Iranian President Hassan Rohani in 2013.

“I’m not here to bash him,” Mr. Farrakhan said. “I’m not here to bash my brother. Let me tell you something. When you want something in this world, the Jew holds the door.”

Mr. Ellison is one of the most well-known figures in the Democratic Party to come under scrutiny for holding anti-Semitic positions, but he’s certainly not the only one.

Representative Danny Davis, D-Ill., who has served in the U.S. Congress for more than 20 years, recently came under fire for making grossly anti-Semitic remarks. In an interview last month, he called Minister Farrakhan an “outstanding human being.”

“The world is so much bigger than Farrakhan and the Jewish question and his position on that and so forth,” he said just last weekend.

RNC Chair Ronna McDaniel said DNC Chair Tom

Economy

A worker stacks boxes of television sets after they have been assembled, checked and repackaged, before moving them to the warehouse at Element Electronics in Winnsboro, South Carolina May 29, 2014. (Photo: Reuters)

A worker stacks boxes of television sets after they have been assembled, checked and repackaged, before moving them to the warehouse at Element Electronics in Winnsboro, South Carolina May 29, 2014. (Photo: Reuters)

The U.S. Census Bureau report on new wholesale trade statistics showed inventories rose 0.8% in January, slightly edging out the median forecast and advance 0.75 estimate. While inventory builds slowed in the fourth quarter (4Q), they appear to be gaining renewed momentum heading into the first quarter (1Q).

Sales

Sales of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations and trading-day differences but not for price changes, were $492.6 billion in January, down 1.1% (±0.7%) from the revised December level. However, they’re up 6.7% (±1.2%) from the level for January 2017. The November 2017 to December 2017 percent change was revised from the preliminary estimate of up 1.2% (±0.7%) to up 0.8% (±0.7%).

Inventories

Total inventories of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations but not for price changes, were $619.1 billion at the end of January, up 0.8% (±0.4%) from the revised December level. Total inventories were up 4.8% (±0.7%) from the revised level for January 2017. The December 2017 to January 2018 percentage change was revised from the advance estimate of up 0.7% (±0.4%) to up 0.8% (±0.4%).

Inventories/Sales Ratio

The inventories/sales ratio for merchant wholesalers, except manufacturers’ sales branches and offices, based on seasonally adjusted data, was 1.26 in January. The January 2017 ratio was 1.28.

The U.S. Census Bureau report on new

Politics

President Donald J. Trump, left, and Supreme Court Justice Anthony Kennedy participate in a public swearing-in ceremony for Justice Neil Gorsuch in the Rose Garden of the White House White House in Washington, Monday, April 10, 2017.

President Donald J. Trump, left, and Supreme Court Justice Anthony Kennedy participate in a public swearing-in ceremony for Justice Neil Gorsuch in the Rose Garden of the White House White House in Washington, Monday, April 10, 2017.

In 2016, U.S. Supreme Court Justice Anthony Kennedy shot down retirement rumors swirling around D.C., but they have returned.

Senator Dean Heller, R-Nev., told a group of people earlier in March that Supreme Court Justice Anthony Kennedy will likely retire in the coming months, the leftwing website POLITICO reported.

“Kennedy is going to retire around sometime early summer,” Senator Heller told a group in Las Vegas. “Which I’m hoping will get our base a little motivated because right now they’re not very motivated. But I think a new Supreme Court justice will get them motivated.”

The Nevada senator isn’t the only lawmaker making similiar remarks behind the scenes.

A retirement for the Republican-appointed swing vote would give President Donald J. Trump and Senate Republicans the opportunity to cement a constitutional lean on the High Court. While Barack Obama put two young judicial activists on the Court during his tenure, President Trump nominated and appointed Justice Neil Gorsuch, who has proven himself a solid constitutional conservative.

Worth noting, recent polling shows the vast majority of Americans believe that the U.S. Supreme Court should strictly follow the U.S. Constitution when issuing rulings. Even though Democrats opposed Justice Gorsuch, Americans viewed him to be mainstream.

As People’s Pundit Daily (PPD) previously examined, the Democratic Party historically has been the party of obstruction with judicial appointments, particularly relating to the U.S. Supreme Court. However, as PPD also previously reported, President Trump set a new record for the most federal judges appointed in his first year, beating the record held jointly by Presidents Richard Nixon and John F. Kennedy.

That pace has continued in 2018.

Senator Heller is up for re-election this year in a state that barely voted for Hillary Clinton in 2016, 47.9% to 45.5%. Like many Republicans, Senator Heller now praises President Trump, particularly on the issues of tax reform and deregulation. He also purports to support changing the rules in the U.S. Senate to allow for a simple majority vote to approve legislation.

However, Danny Tarkanian, a Nevada businessman who has been far more supportive of President Trump than the incumbent, announced in August that he will be challenging Senator Heller for the nomination in the Republican primary. Recent polls show he is more than a contender.

In 2016, U.S. Supreme Court Justice Anthony

Economy

A recruiter talks with a job seeker at the Construction Careers Now! hiring event in Denver, Colorado U.S. August 2, 2017. (Photo: Reuters)

A recruiter talks with a job seeker at the Construction Careers Now! hiring event in Denver, Colorado U.S. August 2, 2017. (Photo: Reuters)

The U.S. economy added 313,000 jobs in February and the unemployment rate was unchanged at an 18-year low of 4.1% for the fifth consecutive month. The very strong jobs report crushed the 205,000 median forecast and the employment situation is much stronger than expected.

(Correction: An earlier version of this article’s title incorrectly stated 305,000 jobs were created in February, though the article itself stated the correct 313,000 figure.)

The Labor Department’s jobs report conducted by the Bureau of Labor Statistics (BLS) shows the civilian labor force increased by 806,000 and the labor force participation rate increased by 0.3% over the month to 63.0. The less-cited but arguably more important employment-population ratio increased by 0.3% to 60.4% after years of decline or no change.

The unemployment rate for blacks declined to 6.9%, nearly matching the lowest its ever been in December 2017. The jobless rates for adult men (3.7%), adult women (3.8%), teenagers (14.4%), whites (3.7%), Asians (2.9%), and Hispanics (4.9%) showed little change. Hispanics are also just 0.1% away from hitting an all-time low, which they matched last year.

But what’s a more positive aspect of the report is that employment rose in higher-paying sectors and wage gains continue to show signs of life.

In February, construction employment increased by a whopping 61,000, with gains in specialty trade contractors (+38,000) and construction of buildings (+16,000). Construction has added 185,000 jobs just over the past 4 months.

Manufacturing added 31,000 jobs, as employment rose in transportation equipment (+8,000), fabricated metal products (+6,000), machinery (+6,000), and primary metals (+4,000). Over the past year, manufacturing has added a solid 224,000 jobs.

Employment in mining rose by 9,000, with most of the increase in support activities for mining (+7,000). Since hitting a low in October 2016, mining has added 69,000 jobs.

In fact, it’s worth noting that all three sectors experienced losses or no change during the previous U.S. administration. Under President Donald Trump, these industries have roared back to life.

In February, average hourly earnings for all employees on private nonfarm payrolls rose by 4 cents to $26.75, following a 7-cent gain in January. Over the year, average hourly earnings have increased by 68 cents, or 2.6%. Average hourly earnings of private-sector production and nonsupervisory employees increased by 6 cents to $22.40 in February.

The employment situation in December was revised up from +160,000 to +175,000, and January was revised up from +200,000 to +239,000. With these revisions, employment gains in December and January combined were 54,000 more than previously reported.

The U.S. economy added 313,000 jobs in

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