Congress Must Veto Taxpayer Bailout of Ireland

Originally posted at FreedomWorks.

Last week, the International Monetary Fund (IMF) announced plans to bailout Ireland. Since U.S. taxpayers pay 17 percent of the IMF’s funding, we are the world’s largest contributors. This means that American taxpayers will be on the hook again for billions of dollars to prop up failed economic policies overseas. With the largest share of voting power, the U.S. government has the authority to veto any IMF bailout. For the sake of American taxpayers, Congress should reject any effort to bailout profligate European countries.

Earlier in the year, the U.S. government sent 145 billion taxpayer dollars to Greece. The economic fiascos in Greece and Ireland are remarkably similar. Both countries spent more money than they could reasonably afford. In Commentary, Jim Glassman writes:

Greece has been behaving as if it were truly rich. The secret was borrowed money. At the end of 2009, the country had a public debt equivalent to 114 percent of its GDP… Meanwhile, Greece consistently violated the EU’s rules for minimum deficit and debt levels. The Greeks, however, lived better and better, with an official retirement age of just 58.

Unfortunately, Ireland’s government also made a series of irresponsible and costly decisions. On the heels of the financial crisis, Ireland responded by increasing the size and scope of government. The Carnegie Endowment for International Peace points out that “European monetary policy…was far too loosefor Ireland.” Just as we saw in the US, Europe’s loose monetary policy caused the supply of credit to explode followed by a foreseeable crash. This bust is an inevitable consequence of excessive credit creation by central banks.

The best solution is to let the market self-correct. This may be a costly and sometimes painful process but increased government involvement will ultimately worsen the problem. However, Ireland wrongly responded to the crisis by “injecting” more money into the economy and purchasing trouble assets. As the Carnegie Endowment further discusses,

These measures obviously took a heavy toll on government finances. At 13.9 percent of GDP, estimated financial sector stabilization costs through 2009 are the highest of any advanced country.

In many ways, Ireland and United States reacted in similar ways to the financial crisis. The US has recently passed a series of poor economic policies—TARP and the “stimulus”—that have failed to produce long-term recovery. We may be following in Ireland’s footsteps.

As the graph below shows, Ireland has spent money at unsustainable levels for the past few years.

Instead of massively cutting spending, Ireland is asking the European Union and IMF—thus American taxpayers— for about 95 billion Euros or $130 billion. Even still, fixed-income strategists at Lloyd TSB Corporate Markets Charles Diebel and David Page state that “the markets currently have virtually zero confidence that the bailout in Ireland will solve the European crisis.” They’re right. Since a taxpayer bailout would encourage reckless behavior, it will actually make fiscal problems worse in the long run.

It is hard to justify that those European countries with foolish economic policies should be rewarded overseas taxpayer funds. The Wall Street Journal reports“the concern is that by rescuing a country that for years flouted fiscal discipline, the European Union would be encouraging such behavior rather than discouraging it.” If Ireland receives a bailout, it is reported that Portugal and Spain may be next in line to seek funding.

We cannot allow this to continue any longer. Congress should veto all proposed international taxpayer bailouts that only reward poor economic decisions. Ireland needs to take full responsibility for their actions. Not force us to pay for their mistakes.

 

Thank Capitalism on Thanksgiving Day

Originally posted at FreedomWorks.

During Thanksgiving Day, most families gather around a bountiful feast and give thanks for all the blessings in their lives. As nearly everyone was taught in primary school, the origin of Thanksgiving traces back to the first plentiful feast held between Puritan settlers and the Wampanoag Indians in the 1620’s. Unfortunately, the official story of Thanksgiving leaves out quite a few important details.

Sadly, few Americans know the real story of the early colonists. For evidence of the failures of communism, we do not need to look to disastrous experiments in foreign lands. In fact, the Plymouth Plantation is one of the most apparent examples of the failures of collectivism.

Centuries before the Communist Manifesto was even published, the Pilgrims set up an economic system that looked similar to the “utopia” advocated by Karl Marx. In the early plantation, there was no such thing as private property or division of labor. It was even forbidden for an individual to produce their own food. All food and supplies were held in common. Plantation officials were supposed to equally distribute goods to all. Plymouth County Governor William Bradford wrote, “the taking away of property, and bringing in community into a common wealth, would make them happy and flourishing.” Needless to say, the colonists didn’t live happily ever after.

The Pilgrims experienced chronic food shortages. Half of the Pilgrims died or went back to England in the first year alone. Governor William Bradford writes in this diary, “So as it well appeared that the famine must still ensue the next year, also, if not some way prevented.” In most classrooms, students learn that various external factors are to blame for the Pilgrim’s suffering. But as economics Professor Benjamin Powell states, “Bad weather or lack of farming knowledge did not cause the pilgrims’ shortages. Bad economic incentives did.”

Incentives matter. Since all colonists received the same rations whether they contributed or not, there was little incentive to actually help produce any food. People quickly realized that it was easier to do nothing and still get rewarded. Despite their Puritan religious convictions, many Pilgrims stole food from one another. Other settlers faked illnesses to get out of work. It was a deadly disaster.

In 1621 and 1622, the Pilgrims and Wampanoag Indians did share two meals together. But it wasn’t until the “miracle of 1623” that they celebrated a bountiful feast like we do today. As Governor William Bradford wrote that year, “instead of famine now God gave them plenty.” This was the year that Bradford switched to a more capitalist system.

After three winters of misery, Governor William Bradford finally changed course. He began to note the flaws of communism, “For this community (so far as it was) was found to breed much confusion and discontent and retard much employment that would have been to their benefit and comfort.”

Private property saved the Pilgrims. The Governor decided to assign “every family a parcel of land” to do with it as they saw fit. Some kept what they produced and others mutually exchanged goods with other Pilgrims. Finally, families could enjoy the fruits of their own labor. The results were dramatic. Never again did they face starvation and food shortages comparable to those dreaded first years. The greater system of property rights allowed everyone to live a richer and fuller life.

In 1683, Governor William Bradford states that this more capitalism system “had very good success for it made all hands very industrious, so as much more corn was planted than otherwise would have been. By this time harvest was come…the face of things was changed, to the rejoicing of the hearts of many.”

Before we sit down to consume our plentiful Thanksgiving meal, we ought to thank capitalism. It has enabled America to become the freest and richest country ever known to man. Let us not forget the lessons of colonial America: communism will always fail to produce a happy and prosperous society.

The Defeat of the Paycheck Fairness Act is a Win for Women

Originally posted at FreedomWorks.org.

On Wednesday, the so-called Paycheck Fairness Act failed cloture vote in the Senate by just two votes. We applaud those lawmakers that blocked this misguided bill that would greatly expand the role of government in employer and workers’ compensation decisions.

But the fight may not be over yet. Two years ago, the misnamed bill passed the House by a fairly wide margin. President Obama has claimed that passing the “common-sense bill” that will supposedly ensure “equal pay” for women is his priority. We could potentially see the bill arise again in the current Lame Duck Session.

Under the guise of protecting against sexism, the bill is a job killer that will ultimately hurt working women. It amends the Fair Labor Standards Act of 1938 and the Equal Pay Act of 1963 to require employers to submit their pay records classified by sex, race and national origin to the federal government.

As the Wall Street Journal correctly notes, this would be a “boon for trial lawyers.” To be sure, trial lawyers would vigilantly scan through every record searching for any instances of pay disparity. It would become much easier for any person to file a class-action lawsuit with punitive damages against employers accused of pay discrimination.

If passed, the bill would do more harm than good for working women. Due to the fear of costly and frivolous lawsuits, employers may think twice before hiring a qualified woman. As Independent Women’s Forum policy analyst Romina Boccia states,

this raises the liability employers face when hiring women. As a consequence, employers, fearful of the prospects of costly litigation to defend against pay-based lawsuits, may avoid hiring women.

With unemployment at a high 9.6 percent, it would be foolish to impose even more burdensome regulations on businesses while likely reducing women’s employment opportunities.

Proponents of this legislation claim that women earn 77 cents to every man’s dollar. This statistic, however, does not even factor men and women who are working in similar jobs with the same background. How much of this wage gap is evidence of gender-based discrimination? Most research has found that the gender pay disparity is largely a result of individual choices made by men and women.

The Paycheck Fairness Act tries to solve a problem that largely doesn’t even exist. In the New York Times, Christina Hoff Sommers writes,

There are lots of other reasons men might earn more than women, including differences in education, experience and job tenure. When these factors are taken into account the gap narrows considerably — in some studies, to the point of vanishing. A recent survey found that young, childless, single urban women earn 8 percent more than their male counterparts, mostly because more of them earn college degrees.

Even a study from the Labor Department found that the pay gap between men and women “may be almost entirely the result of the individual choices being made by both male and female workers.” The study cites a number of factors that explain the wage gap statistic including men are more likely to take high risk jobs, work longer hours and accept jobs that require lots of required traveling.

The reality is that we are all forced to make trade offs in life. In the Washington Post, Independent Women’s Forum scholar Carrie Lukas admits that she willing forewent higher pay for more work flexibility. She writes:

I’m the cause of the wage gap — I and hundreds of thousands of women like me… I sought out a specialty and employer that seemed best suited to balancing my work and family life. When I had my daughter, I took time off and then opted to stay home full time and telecommute. I’m not making as much money as I could, but I’m compensated by having the best working arrangement I could hope for.

President Obama recently released a press release claiming that he will continue to fight for “equal pay for equal work.” It is important to understand that gender discrimination plays little to no role in pay disparity between men and women. It is largely a result of individual choices that women make which employers do not have control over. There is nothing “fair” about the Paycheck Fairness Act. Thankfully, the misguided bill that would empower trial lawyers at the expense of working women failed to move forward in the Senate. Let’s hope it stays defeated.

Stop the TSA’s Assault on Freedom

Originally posted at Young Americans for Liberty.

The backlash over the Transportation Security Administration’s (TSA) new invasive procedures has transcended left vs. right politics. Under the banner of security, American citizens are being subjected to virtual strip searches or intrusive full contact pat downs from an armed government bureaucrat. These policies do more to humiliate us and pad the pockets of lobbyists than actually keep us safe.

When will we say “enough is enough?” When will we refuse to surrender our fundamental right to privacy and our basic civil liberties? With the holiday season approaching, 96 percent of Americans say that they are less likely to fly due to the new invasive “security” measures. Only 3 percent of those surveyed claim that these are necessary procedures needed to prevent terrorism.

Some notable pilots, airline attendances and passengers have already stood up to these unconstitutional procedures. The head of a flight attendant’s union said that these intimate pat downs—the only alternative to the naked scanner— would “drudge up some bad memories” for anyone who has ever been sexually assaulted. The U.S Airline Pilots Association (USAPA) and Allied Pilots Association—representing a total of 16,500 pilots— have issued statements advising pilots to avoid the new privacy infringing procedures. According to the USAPA:

Since that time several pilots and flight attendants have encountered problems with TSOs and their implementation of the rules. One US Airways pilot, after being selected for an enhanced pat-down, experienced a frisking that has left him unable to function as a crewmember. The words this pilot used to describe the incident included ‘sexual molestation.

The scanners are clearly a violation of the fourth amendment which guards against unreasonable searches and seizures without probable cause. How does getting on an airplane justify probable cause? Surely, a three year old boarding an airplane is not a reasonable belief that he or she has committed a crime.

What happens after a TSA agent examines our private parts via computer screen in a back room? Even the U.S Marshals Service recently admitted to saving and storing 35,000 of these inappropriate images for questionable purposes.

While the TSA claims that these scanners are perfectly safe, expert scientists are saying otherwise. A group of scientists at the University of California, San Francisco wrote to the White House about potential health risks saying that “There is good reason to believe that these scanners will increase the risk of cancer to children and other vulnerable populations.” Pilots and other frequent fliers have expressed concern that the level of radiation may have long term health damages.

At most airports with the scanners, people—including small children—are chosen supposedly at random to enter into the full body scanner. TSA plans to eventually replace metal detectors with mandatory naked scanners at every airport. In England, however, these scanners are banned for children under 18 years old since they are a violation of child pornography laws. Why should adults have to submit to a porno scanner before riding on an airplane?

In the Washington Examiner, Tim Carney writes that these full body scanners have a well-connected lobby. So far, major contractors within the Department of Homeland Security that manufacture these scanners have made hundreds of millions of dollars.  He notes:

Rapiscan’s [Security Systems] lobbyists include Susan Carr, a former senior legislative aide to Rep. David Price, D-N.C., chairman of the Homeland Security Subcommittee. When Defense Daily reported on Price’s appropriations bill last winter, the publication noted ‘Price likes the budget for its emphasis on filling gaps in aviation security, in particular the whole body imaging systems.

Moreover, these expensive scanners are likely ineffective at detecting any weapons or explosives that a person might have. Since the naked machines are incapable of seeing through skin, a terrorist could simply hide weapons in body cavities. Tim Carney writes:

Deploying these naked scanners was a reaction to Umar Farouk Abdulmutallab’s failed attempt to blow up a plane on Christmas 2009, but the Government Accountability Office found, “it remains unclear whether [the scanners] would have been able to detect the weapon Mr. Abdulmutallab used.

Since the creation of the TSA in 2001, it has proven to be an ineffective and abusive federal agency. One can only imagine the number of lawsuits that TSA would have against them if they were a private company held accountable to the American public. As Ron Paul writes, “TSA has created an atmosphere of fear and meek subservience in our airports that smacks of Soviet bureaucratic bullying.”

These government bullies do not belong in our airports. Airline companies—many that opposed the TSA since its creation—have more incentives to provide excellent security that protects customers while treating them with respect. For the government to require you to be photographed naked or groped before traveling is humiliating and dehumanizing. Let’s send a message to the Obama administration that we wish to fly with dignity.

Disappointing Jobs Report: Unemployment Remains at 9.6 Percent

Originally posted at Truth in Jobs.

As we’ve come to expect, yet another lackluster jobs report has been released. The highly anticipated Labor Department Jobs Report shows that only 151,000 jobs were added October. This slight increase in jobs was not enough to lower the official unemployment rate. For the third month in a row, the unemployment rate has been unchanged at 9.6 percent. Yet, this not even factor in the 1.2 million Americans who have altogether given up searching for a job. Additionally, roughly 18 percent of part-time workers are underemployed meaning they want full-time employment. The Labor Department chart below shows the painfully slow economic “recovery”:

Last week, the American people’s voices were heard at the ballot box. Many lawmakers who voted for big government schemes such as the $814 “stimulus” were booted out of office. This should come as no surprise. Back in February 2009, the Obama administration promised that the massive spending package would keep the unemployment rate below 8 percent. In late 2009, the unemployment rate reached double digits with the “stimulus” enacted and has hovered around 10 percent ever since.

Congress cannot create new purchasing power out of thin air. Every dime that was supposedly injected into the economy was first taken from taxpayers or borrowed out of the economy. Therefore, “stimulus” plans merely redistribute money and cannot create long-term economic growth. Obama’s misguided policies likely made the recession much worse by taking billions of dollars away from the productive private sector. In fact, a Truth in Jobs study found that 10 million jobs were not created in the private sector largely due to flawed “stimulus” plans.

The new jobs report also shows that the number of long term jobless—those jobless for 27 weeks or over—is unchanged at 6.2 million. On November 2nd, the unemployment extension that President Obama signed back in July will expire. Indiana unemployment offices are even hiring armed security out of concern how people might act when they have exhausted their unemployment benefits.

Currently, unemployed American workers can generally collect unemployment benefits for up to 99 weeks—about 2 years. On Wednesday, President Obama called on Congress to extend unemployment insurance during the upcoming lame duck session. He stated:

I think it makes sense for us to extend unemployment insurance because there are still a lot of folks out there hurting.

A CNN article predicts that an unemployment benefits extension will be one of Congress’ main objections once they return on November 15th. How much further does Obama wish to extend unemployment insurance? At what point is enough, enough?

It is true that many Americans are struggling to make ends meet. Polls show that the majority of Americans still feel the severe impact of the prolonged Great Recession. But we must account for the unintended consequences associated with excessive unemployment insurance. According to the Wall Street Journal,

Some workers agree that unemployment benefits make them less likely to take whatever job comes along, particularly when those jobs don’t pay much. Michael Hatchell, a 52-year-old mechanic in Lumberton, N.C., says he turned down more than a dozen offers during the 59 weeks he was unemployed, because they didn’t pay more than he was collecting in benefits.

Naturally, humans respond to incentives. As a result of excessive unemployment benefits, people may not be as proactive about searching for jobs or may become pickier on which they jobs they accept. The WSJ article says that despite high unemployment some firms “are getting an underwhelming response, and many are having trouble filling open positions.”

Most people are searching to find a job that pays comparable to their previous job. A study from CareerBuilder’s consulting firm Personified finds that 92 percent of unemployed people who are offered a job reject the opportunity mostly because the salary was too low. They may be able to get a job but not the most desirable job.

Even former White House economic adviser Larry Summers acknowledges that excessive unemployment insurance will increase the long-term jobless:

Unemployment insurance also extends the time a person stays off the job. Clark and I estimated that the existence of unemployment insurance almost doubles the number of unemployment spells lasting more than three months.

Ultimately, excessive unemployment benefits create a sense of dependency on the government. We should instead promote self-sufficiency and independence by encouraging work. Simultaneously, Congress should promote job growth by stopping the 2011 tax hikes that will likely force more Americans to rely on unemployment benefits for their source of income. These steps are crucial to reduce the high 9.6 unemployment rate that we still face.

Washington’s Proposed Income Tax Will Stifle Economic Growth

Originally posted at FreedomWorks.org.

Washington State is often listed as one of the best places to live, retire and open a business. Home to some of the fastest-growing industries in the nation, Washington was ranked by Forbes as the second best state for businesses in 2009. Furthermore, Washington was recently featured on U.S News and Reports’ list of the five best states to build a nest egg. But all that could change soon.

Washington’s absence of an income tax is a large selling point that has attracted a great deal of entrepreneurs and productive citizens to the state. Many of these successful residents have migrated from states with high income tax burdens. However, there is a statewide proposition, Initiative 1098, on the November ballot that would impose a 5 percent income tax on individuals earning over $200,000 or $400,000 for married couples. Any individual making over $500,000 or couple earning $1,000,000 will be forced to pay an additional four percent surcharge.

If passed, Washington would suddenly go from having no income tax to imposing the eighth highest rate in the country. After two years, the law would allow the legislature to extend the income tax to nearly all residents. Keep in mind that the federal income tax once only applied to the rich. Today, the federal income tax is levied on Americans of all incomes. As we’ve seen from other states that have adopted income taxes in the past few decades, these tax hikes will crumble the economy.

In fact, states with no income taxes have far more job growth and economic gains than those with income taxes—especially those with high income tax rates. According to the American Legislative Exchange Council, the nine states without income taxes had an average job growth of 18.2 percent over the past decade. Conversely, the nine states that have a high income tax rate experienced a mere 8.4 percent rise in jobs. Income taxes discourage work and investment while infringing on individual liberty.

In various ways, the wealthy residents are the most responsive to shifting tax rates. Unlike the rest of us, the rich are likely to own more than one house. If Washington introduces a steep income tax, many wealthy residents will simply pack up and leave or at least file taxes in a different state. That’s exactly what happened in Maryland. Governor Martin O’Malley raised income tax levels on wealthy households to 6.25 percent from 4.75 percent in 2008. In the end, Maryland’s millionaire income tax back fired. It is estimated that Maryland lost $1 billion because one-third of its wealthy residents moved or filed their taxes in other states with lower tax burdens.

Washington should learn from other states’ mistakes. Simply, soak-the-rich policies have never worked in anyone’s favor. Washington’s proposed income tax will also encourage job-creating businesses to go elsewhere to escape high taxes. As an unintended consequence, all of the 11 states that have introduced income taxes within the past 50 years have seen their share of U.S output decline.

Unfortunately, a few prominent billionaires are supportive of tax hikes on the rich. Notably, wealthy lawyer Bill Gates Sr. states that “rich people aren’t paying enough.”  He has personally contributed $500,000 to promote Initiative 1098 to force citizens in Washington to surrender more of their hard-earned money to their government.

Bill Gates Sr. should live and lead by example. As economist Mark Skousen said “the triumph of persuasion over force is the sign of a civilized society.” If Bill Gates Sr. strongly believes that the rich do not pay enough in taxes, he should cut a check to the Washington State Government and peacefully encourage others to do the same. However, he has chosen to use the power of the government to coerce others to pay more money against their will.

If passed, the new income tax may deter Americans from investing in Washington. Punishing the rich through higher taxes will ultimately hurt everyone in the state. If you want less of something, you tax it. Why would Washingtonians want less income? By forcing productive citizens to turn over nine percent of their investments to the state government, countless jobs will be destroyed or never created.

Instead, state residents should be free to spend or donate their hard-earned money in anyway that they desire. After all, individuals in the private sector spend their money in a more efficient manner than government bureaucrats. Washingtonians who want more jobs and economic growth will vote against Initiative 1098 to preserve the state’s competitive income tax rate of zero.

Harsh Government Regulations Block Entrepreneurship

Have a great idea for a business? Not so fast. At nearly every step of the entrepreneurial process, the government imposes strict rules and regulations. Some regulations are so ridiculous that it discourages would-be entrepreneurships from even starting their business. For instance, in Texas it is legally required that computer repair technicians obtain an extraneous degree in criminal justice.  In Florida, it is illegal to work as an interior designer without proper government licensing. Even if the designer has a college degree in the field, performing interior design services without a license is punishable by up to a year in jail or $1,000 in fines.

Often, compulsory licensing is used to restrict competition in a marketplace. Well-funded industry cartels lobby for strict licensing requirements that make it difficult for newcomers to sell their competing product or service. These harsh licensing laws are harmful to both entrepreneurs and consumers. Would-be entrepreneurs who cannot afford the high cost of licensing will not have the opportunity to operate their business. As a result, there will be fewer employment opportunities and consumers will be forced to pay higher prices for goods and services with less variety.

With unemployment at a high 9.6 percent, we must strive to get rid of unnecessary burdens faced by job creators. As the video “Why Can’t Chuck Get His Business Off the Ground” from the Institute for Justice shows, some would-be entrepreneurs simply give up due to these harsh regulations that limit competition in the market place.