Archive for December, 2012

Bankrupting America’s New iPhone App

Wednesday, December 26th, 2012

Originally posted at the Coalition to Reduce Spending

Over at Bankrupting America, they’ve produced a new application available for iOS devices in Apple’s App Store.  It’s filled with national and local news about government waste and relevant topics, as well as links to their blog, and facts about the debt, including helpful visuals and infographics. The local news about wasteful spending and state related issues is aggregated based on your location, which is a cool addition.

However, the most unique feature is the interactive one, which asks users to take a photo or video of economic waste in their area, and submit it through the application. Bankrupting American then aggregates this information, and empowers citizens to get involved in understanding the breadth of wasteful spending from a ground-up perspective.

As Gretchen Hamel, Executive Director of Public Notice (the non-profit that runs the Bankrupting America project) said:

“Since its launch, Bankrupting America has worked toward two goals: educating Americans on fiscal issues and urging Washington to spend responsibly. This app will keep our supporters informed while empowering them to take action against wasteful government spending in their communities. By facilitating a two-way flow of information, Bankrupting America will energize Americans to be active participants in the national conversation on spending rather than passive observers.”

I was playing around with the app this afternoon, and I found the facts section particularly helpful for quick reference. There are polls that keep you informed regarding what Americans think about government waste, and the latest on spending across the board. It’s nice to see the fundamentally important discussion about government spending and debt making its way into the American mainstream. Absent citizen concern, we’ll never make the changes necessary to get our country back on a sustainable fiscal path.

Remember Milton Friedman: Spending Is Taxing

Tuesday, December 18th, 2012

Originally posted at Real Clear Politics and co-authored with Jonathan Bydlak 

Keep your eye on one thing and one thing only: how much government is spending, because that’s the true tax … If you’re not paying for it in the form of explicit taxes, you’re paying for it indirectly in the form of inflation or in the form of borrowing. The thing you should keep your eye on is what government spends, and the real problem is to hold down government spending as a fraction of our income, and if you do that, you can stop worrying about the debt.

 Milton Friedman

As the fiscal cliff approaches, many are asking whether Republicans should break their pledges and vote to raise taxes.

These stories miss the point: Republicans have already voted many times to raise taxes.

As Friedman explained, the true burden of taxation is whatever government spends. Jerry Jordan, a former member of President Reagan’s Council of Economic Advisors, told us recently that Friedman would frequently remind Reagan and others during the early 1980s that reductions in marginal tax rates — which Friedman supported — were not real tax cuts if spending was not reduced.

It is time to remind Republicans that the same rules of economics still apply to today’s deficit spending. The debate over the “fiscal cliff” presents an opportunity to hammer home what is fundamentally flawed about Washington’s approach to funding government.

Let’s start by finally acknowledging that Republicans who have been complicit in deficit spending have repeatedly violated Grover Norquist’s “Taxpayer Protection Pledge.” While Norquist’s pledge has been effective politically, the policy goals of fiscal conservatives remain unfulfilled, because deficit spending is taxation.

The problem with focusing foremost on preventing new taxes is that borrowing and printing to finance government largesse causes even more pernicious economic distortions. While taxation is harmful in the here and now, manipulating interest rate markets alters incentives to invest and consume not only today, but in the future as well.

An opportunity exists to drive the public discussion toward a focus on the true cause of our nation’s fiscal problems: overspending. Only by putting our country on a sustainable fiscal path can we prevent the tax increases that adherents to Norquist’s pledge seek to avoid. This will require that elected officials commit to voting for budgets that are balanced, against new spending programs that are not offset, and against new borrowing that requires increasing the debt ceiling.

An unfortunate unintended consequence of Norquist’s pledge is that it has provided cover to those Republicans who wish to maintain the guise of fiscal responsibility while simultaneously raising the debt ceiling. Let’s be clear: voting not to raise taxes while also increasing deficit spending means we not only have to shoulder the high cost of government, we have to pay for it plus interest.

As Dustin Siggins and the Heritage Foundation’s William Beach recently noted, “[most people] forget about the impact of interest payments on future budgets.” According to their analysis, if interest rates rise to their historical average of 4 percent, interest payments “would jump by 90%” — or more — as the national debt increases.

Grover Norquist was right to focus on creating incentives to shrink government. As Friedman said in 1975, “I do not believe that the solution to our problem is simply to elect the right people. The important thing is to establish a political climate of opinion which will make it politically profitable for the wrong people to do the right thing.”

Ultimately, however, the “Taxpayer Protection Pledge” only addresses one aspect of an increasingly complicated problem. Because many politicians who have signed it continuously vote for more deficit spending, they have in effect violated the pledge. Fear of deficits was supposed to encourage spending restraint. But now, that very fear has been turned around to make conservatives more willing to support tax increases. It’s almost like Milton Friedman saw it coming.