Category: Public Policy

Blog author: jcarter
Monday, November 30, 2015

PoorTaxImagine you’re a single mom with one child who receives $19,300 a year in government benefits. A local business offers to hire you full-time at an hourly rate of $15 an hour. At 2,000 hours a year (40 hours for 50 weeks) you would earn $30,000. Should you take the job or stay on the government dole?

The additional $10,700 a year certainly sounds enticing. But because you would lose your benefits and have to pay taxes, your disposable income would be about 31 percent less, around $20,700. By working full-time you’d only earn $1,400 a year more than when you were on welfare. That means you are working full-time to earn an additional 70 cents more an hour than when you were unemployed. Why bother?

That 31 percent is the effective marginal tax rate for low- and moderate-income workers will face, on average, in 2016. The marginal tax rate is the percentage of an additional dollar of earnings that is unavailable to an individual because it is paid in taxes or offset by reduced benefits from government programs. As the Congressional Budget Office points out in a statement of the obvious, that rate affects people’s incentives to work: “In particular, when marginal tax rates are high, people tend to respond to the smaller financial gain from employment by working fewer hours, altering the intensity of their work, or not working at all.”

As Robert VerBruggen notes, that marginal rate remains high well above the poverty line:

boston-telephone-directory“I am obliged to confess,” wrote William F. Buckley, Jr. in 1963, “that I should sooner live in a society governed by the first two thousand names in the Boston telephone directory than in a society governed by the two thousand people on the faculty of Harvard University.”

A similar sentiment seems to now be shared by a majority of the American people. A recent survey by Pew Research finds that 55 percent of the public believes “ordinary Americans” would do a better job of solving national problems than would our elected leaders. An even greater percentage (57 percent) say they are frustrated with the federal government, while fewer than 1 in 5 (18 percent) say they are basically content.

Despite this frustration, half or more say the federal government is doing a “very good” or “somewhat good” job in 10 of the 13 governmental functions tested in the survey. The areas where the federal government receives the lowest remarks are in managing the nation’s immigration system and helping people get out of poverty. Nearly seven-in-ten (68 percent) say the government does a very or somewhat bad job in managing the immigration system and 61 percent say the government is doing a bad job helping people out of poverty.


Blog author: jcarter
Thursday, November 19, 2015

Corruption-bribe-5-x-7_-123rfWhen Americans think of corruption, we tend to think of third world countries where getting anything done often requires bribing local government officials. We tend not to have such problems here; our corruption is more subtle and sophisticated, and often involves state level lawmakers.

For instance, over the past few years there have seen corruption-related charges or convictions of the house or assembly speakers of Alabama (bribery, misuse of campaign funds), Rhode Island (bribery, misuse of campaign funds), South Carolina (misuse of campaign funds), and New York (bribery, fraud, extortion, etc.). The former governor of Virginia was convicted for taking a bribe and the governor of Oregon resigned because of corruption charges.

That’s one of the reasons why states need systems and laws in place that can help prevent and expose corruption. So how are individual states doing in regards to transparency and accountability?

red-tape-govt-300x300Of all the executive orders issued by President Obama, one of the most important is one most people never knew existed: Executive Order 13563 – Improving Regulation and Regulatory Review .

In the order, the president requires federal agencies to perform a “retrospective analysis” of existing regulations to evaluate their efficiency and effectiveness:

(a) To facilitate the periodic review of existing significant regulations, agencies shall consider how best to promote retrospective analysis of rules that may be outmoded, ineffective, insufficient, or excessively burdensome, and to modify, streamline, expand, or repeal them in accordance with what has been learned. Such retrospective analyses, including supporting data, should be released online whenever possible.

(b) Within 120 days of the date of this order, each agency shall develop and submit to the Office of Information and Regulatory Affairs a preliminary plan, consistent with law and its resources and regulatory priorities, under which the agency will periodically review its existing significant regulations to determine whether any such regulations should be modified, streamlined, expanded, or repealed so as to make the agency’s regulatory program more effective or less burdensome in achieving the regulatory objectives.

This executive order was issued four years ago—in January 2011. So how is that evaluation process going?

In 2014, the George Washington University Regulatory Studies Center launched a yearlong effort to evaluate high priority proposed rules to “determine whether it was designed in a manner that would make its outcomes measurable ex post.” Unfortunately, their findings are not at all surprising:

Climate-Change-Report-23For the past few years Pope Francis has made it clear he considers climate change to be an essential issue of concern. In his recent encyclical, Laudato Si’, he wrote that climate change is one of the “principal challenges facing humanity in our day.” Has Francis been able to convince American Catholics to share his concern?

Maybe so. A new Pew Research survey shows that Catholics, along with people who are unaffiliated with major religions, are more likely to agree with the pope’s position than are Protestants in the U.S.

taylor-swift-moneyMargaret Thatcher famously said the problem with socialist governments is that, “They always run out of other people’s money.” Unfortunately, that’s true for almost all governments. Even more unfortunate, though, is that some people refuse to believe that government can ever run out of other people’s money.

Some people claim, for instance, that the government can continue to borrow and spend (and should do more of both since interest rates are currently low) since the national debt is not a problem. Take, for example, Matthew Yglesias, who writes about economics for Vox. He famously said (and repeats far too often) that, “the U.S. government can never run out of dollars. Unlike you, or the company you work for, or the town you live in, the federal government prints dollars.”

Unpacking the economic ignorance embedded in that claim would take all day. So let’s set aside the question of how the government will be able to pay off the debt in the future and focus instead on the part of the debt the government pays right now: interest.

How does government pay that interest? The answer, of course, is with “other people’s money” (i.e., taxes). Interest on the debt is paid out of the tax dollars that are taken from the American people. That is money that comes out of our pockets today to pay for money we borrowed in the past. And it’s a lot of money.

pharma-pills-and-moneyLast month Turing Pharmaceuticals felt the backlash after a medication they sold for $1 a pill in 2010 increased overnight to $750 a tablet.

Politicians like Hillary Rodham Clinton and Bernie Sanders were quick to claim that this is why we needed more government intervention in the healthcare system. But at the time I pointed out that the reason Turing was able to raise the price so spectacularly was not because of a failure of the free market but because of government intervention:

The free market isn’t the reason [Turing’s CEO] Shkreli was able to raise the price. In fact, if he had to sell his product in a truly free market environment the price would likely remain low. And even now, if he continued to keep the price high, some enterprising pharmaceutical company would start making Daraprim themselves, increasing the supply and lowering the cost.

And that’s just what happened. That enterprising pharmaceutical company turned out to be Imprimis Pharmaceuticals. The company announced yesterday that it will start offering customizable compounded formulations of pyrimethamine (the generic name for Daraprim) and leucovorin in oral capsules starting as low as $99.00 for a 100 count bottle, or at a cost of under a dollar per capsule.

In making the announcement Mark L. Baum, CEO of Imprimis, said,