It’s playoff baseball time here in Texas—go ‘Stros! But baseball fans know everything depends on the umpires—as the great Bill Klem said, when asked whether a ball was fair or foul, “It ain’t nothing until I call it.”

It’s time for us to call fair and foul on the Texas Legislature; there were some homeruns, some wild pitches and even some unforced errors. And ultimately, it’s the taxpayers who either win or lose.

To begin with, lawmakers did well in remembering the taxpayer by maintaining a Conservative Texas Budget (CTB), which sets a maximum appropriations threshold based on the average taxpayer’s ability to pay for it (as measured by population growth plus inflation), and passing a stronger spending limit.

There was concern with Congress sending Texas $16.3 billion in mostly discretionary funding through the American Rescue Plan (ARPA). During the recently ended third special session, the Legislature appropriated $13.3 billion of it, with a positive of leaving $3 billion for possible tax relief later.

Another winning play is that the Legislature followed most of the Foundation’s recommendations for ARPA funds.

It sustained the CTB and used the funds for only one-time expenditures which will help avoid any fiscal cliffs like some claimed Texas had after Obama’s one-time “stimulus” funds in 2009. Legislators appropriately used $7.2 billion—about half of ARPA funds—for debt payment and replenishment of the state’s depleted unemployment trust fund after the shutdown recession to avoid a massive payroll tax hike on employers. And they ensured transparency and accountability by requiring that the uses of these funds be posted on a government website and put in a separate account, respectively.

While those actions benefited taxpayers, a botched play was in not providing substantial, broad-based property tax relief.

This could have been done, as there were surplus funds of $6 billion in general revenue and $3 billion in ARPA funds. All legislators needed to do was use surplus funds to reduce school district maintenance and operations property taxes, thereby continuing the path toward eliminating property taxes by 2033.

Instead, lawmakers raised the homestead exemption for school district property taxes by $15,000 to $40,000, funded by about $450 million in general revenue annually. And even this won’t happen unless voters approve this constitutional amendment in May 2022. If passed, more than 5 million homeowners would benefit from average savings of $176—excluding other higher local property taxes. So, no relief for business owners, landlords, apartment owners, renters, and those with secondary properties.

This compromise followed proposals in the Senate that would have provided at least $2 billion in general revenue to lower school district property taxes for everyone and in the House that would have provided $3 billion in ARPA funds for checks to only those with a homestead.

Clearly, the Senate’s version would have been broad-based, even though more could have been added to it. Combining it with HB 90 in the House that would have provided structural reform to eliminate property taxes over time, which died in House calendars, could have provided extraordinary relief. Instead, it appears that lobbyists for the public ed establishment pushed against this pro-taxpayer effort, resulting in little-to-no relief through the increase in the homestead exemption.

A huge unforced error was the wasteful spending of ARPA funds.

The decision to allocate $325 million in ARPA funds to support $3.3 billion in tuition revenue bonds for construction at higher education institutions is at the top of the fouls list. While tuition and student debt continue to rise, the quality of education is declining, and universities are already receiving billions of dollars, this provision is ill-advised.

It’s unfortunate that instead of providing tax relief these funds went to projects like student housing enhancements for the Marine Science Institute at the University of Texas at Austin and $100 million to two state university systems for institutional enhancements.

However, not all state legislators sought to rubber stamp additional funds to a declining higher education system. Rep. Matt Schaefer (R-Tyler) proposed an amendment that sought to connect the amount of money institutions can receive based on the rate of tuition increase. Unfortunately, the amendment didn’t pass, ending an opportunity to curb the fiscal bloat that plagues Texas universities, students, and taxpayers.

Putting this year’s legislative game in perspective there were many hits but also some strikeouts, especially on major property tax relief. But taxpayers did get relief from less government spending than what was available.

The Legislature left about $20 billion in total revenue, including $6 billion in general revenue, and $12 billion in the rainy day fund and $3 billion in ARPA funds on the table. Texas should return much if not all of these surplus funds to struggling taxpayers so they can recover from the shutdown recession, withstand the stagflation by the Biden administration, and actually own their property.

But as with baseball, there’s always next season.

Commentary

​Given Texas’s commitment to lower taxes and limited government, it’s not surprising that the economy here is booming. Allowing people and businesses to keep more of their hard-earned money is the not-so-secret reason Texas often leads the country in job creation, economic growth, and inbound domestic migration.

Unfortunately, Democrats in Washington are trying to enact a reckless $5 trillion spending bill that would also raise taxes by the most in at least fifty years while leaving a mountain of debt. This could be a crushing blow for the American economy, and Texas could be one of the states hardest hit.

Indeed, research from the Texas Public Policy Foundation shows that Biden’s “Build Back Better” plan could cost the U.S. economy a conservatively estimated 5.3 million jobs compared with baseline growth over the next decade—and 467,000 of those jobs would be lost in Texas. This should come as no surprise to anyone as Democrats are not only trying to raise taxes broadly on individuals and job creators, but are also taking aim at specific industries they don’t like. That’s bad news for Texas.

In their bid to end the use of fossil fuels, Democrats would hit oil and gas producers with punitive fee increases and potential tax changes that would make reliable energy production less competitive. This will directly impact Texas families, as 2.5 million Texans have jobs that are directly or indirectly supported by the oil and gas industry. And these additional government-mandated burdens will drive up prices on gasoline and fuel, as well as other everyday prices like food and clothing.

Americans deserve a healthy economy, not more burdensome tax measures and policies that will make the inflation situation worse.

Thankfully, a small but significant group of moderate Democrats, including South Texas Reps. Filemon Vela, Vicente Gonzalez, and Henry Cuellar have publicly expressed concerns with the reckless spending bill. These members wrote to Speaker Pelosi in late September and asked Democrat leaders to “reconsider some of the revenue raising provisions of this otherwise sound and critical effort,” and said they’re concerned about provisions that would “jeopardize U.S. energy independence, harm American jobs, raise energy costs, and increase global emissions.”

Their concerns are valid, and they are certainly correct that the Build Back Better plan would hurt American workers. However, despite their letter, in August these three representatives voted to allow the $5 trillion bill to move through the legislative process. If they truly have concerns about this disastrous bill—as they have publicly stated—then they should have voted “no” and forced Speaker Pelosi to hit the brakes. But it’s not too late. With a razor-thin Democrat majority in the House, these three members of Congress could flex their collective muscle and end this assault on Texans and all Americans.

Absent the political courage of these or other Democrats in Congress, Biden and Democrats will enact job-killing policies that place a heavy burden on taxpayers of nearly all income levels. For instance, if Biden gets his way and raises the corporate tax rate from 21 percent to 28 percent, $100 billion of this tax hike will be shouldered by taxpayers making $100,000 or less according to calculations by National Taxpayers Union. Despite his claim that only the wealthy will pay higher taxes, Congress’s Joint Committee on Taxation says that under Biden’s plan, people making just $30,000 and above will pay higher taxes starting in 2027.

Small businesses could also face higher tax burdens as Biden would increase their tax rates and place new restrictions on their ability to utilize the 20% tax deduction that was created in the Tax Cuts and Jobs Act. That’s just the tip of the iceberg: Biden’s plan also involves tax hikes on investors, property owners, and even cigarette and vape users—tax hikes that would further break his pledge to not raise taxes on anyone making less than $400,000 a year.

The country is still recovering from the COVID-related shutdowns and dealing with economic problems like inflation that have taken a heavy toll on families across the country. After spending trillions of dollars over the past eighteen months, Congress shouldn’t be considering a costly tax-and-spend plan that would jeopardize the American recovery. Instead, members like those in south Texas should find ways to get our fiscal house in order by reducing spending. Killing this bill would be a good start.

Commentary

​Governments’ forced business closures and mandates in response to COVID-19 resulted in much economic destruction during what I am calling the “shutdown recession.” Returns to normal, to work, and to pro-growth polices are essential for the economic recovery and people’s flourishing. However, more government intervention in response to the Delta variant and reckless fiscal and monetary policies out of D.C. are hindering the recovery. The labor market has been improving more slowly than expected even though Congress has authorized $6 trillion since the pandemic started and may soon authorize another $6.2 trillion, while the Federal Reserve has more than doubled its balance sheet to $8.4 trillion. The federal government has been paying people not to work thereby supporting labor market shortages and a near record high of 2.1 million more job openings than total unemployed. In August, there was a record high of 2.9% of job holders who quit their job, possibly due in part to the vaccine mandates. Congress should stop paying people not to work, reject the reckless Build Back Better agenda, and return to the pro-growth policies supporting vast opportunities to let people prosper.

Get the report ⬇️

Texas and football go hand-in-hand. There is nothing like the two-minute drill at the end of a game with increased adrenaline pushing you on to victory. Texas lawmakers are likely feeling a similar jolt in an effort to appropriate the remaining $16 billion of the $40 billion that Congress sent to Texas in the American Rescue Plan Act (ARPA) earlier this year.

The Legislature has done a good job so far this year in keeping a responsible budget, but these federal funds could tempt lawmakers to spike the football early—allocating ARPA money that doesn’t help the Texas taxpayer while putting the nation further into debt. In fact, a responsible approach would lead Texas to reject these funds, given the state has a large budget surplus, though there’s likely no political will to do so.

Let’s return to the first quarter of the game.

The Legislature passed the 2022-23 state budget well below TPPF’s Conservative Texas Budget (CTB), which sets a maximum threshold on the budget based on the average taxpayer’s ability to pay for it (as measured by population growth plus inflation). And lawmakers parked $12 billion in the state’s rainy day fund.

This approach maintained the overall strategy that the Legislature has been operating under for the last four budgets. By staying within the CTB maximum threshold, and passing into law a stronger spending limit this year, lawmakers pledged to keep more money in taxpayers’ pocket.

Now the state is in the fourth quarter and is determining how to allocate the ARPA funds, which are your taxpayer dollars. The nearly $16 billion offers plenty of opportunity—both good and bad—for  lawmakers to spend hard-earned taxpayer dollars.

The game plans in the Texas Senate with SB 8 and the House with HB 145 are largely the same, with just a $350 million difference. Most items appear to abide by the restrictions on the use of funds outlined by the U.S. Treasury’s interim guidance. So far, so good. But about $500 million is being set aside for university construction in both bills, which doesn’t count as infrastructure (the feds define infrastructure as sewer, water, and broadband). How is this a good use of taxpayer dollars?

In their current plans, both start strong with over $7.2 billion designated to pay the outstanding debt owed to the U.S. Treasury’s Unemployment Trust Fund and to replenish most of what was in the fund pre-shutdown. This is essential because without paying, this there would be a huge spike in employer taxes that support this fund. But we would recommend $7.8 billion for full funding to provide a better cushion.

The next strong play in both plans is to allocate $3.7 billion for public safety and criminal justice. These funds appear to be allocated to swap with general revenue funds already appropriated in the current budget cycle for border security and wall thereby not further growing spending. This could also free funds up later for property tax relief. This allocation provides serious relief to taxpayers as the state has been subsidizing the border crisis for the rest of the country because of the inept leadership on this issue in Washington.

These strong plays follow two-thirds of the Foundation’s winning strategy for ARPA funds. The third one is necessary to get Texas across the goal line—property tax relief.

Burdensome local property taxes continue to climb, forcing some Texans to delay major life decisions like marriage and home ownership. Using the rest of the ARPA funds to add to the at least $2 billion in SB 1 to reduce school district M&O property taxes for the 2022-23 school year would help lower tax bills at a time when many taxpayers are suffering from the effects of the shutdowns. This combination of plays along with HB 90 and other moves could eliminate property taxes by 2033. Three states have already started cutting taxes using ARPA funds so Texas shouldn’t delay.

In addition to using ARPA funds for the plays above to move the down the field, the Legislature should use best practices with these funds for transparency and accountability for taxpayers. Any use of ARPA funds must be for only one-time expenditures, which will help avoid a fiscal cliff like that after Obama’s one-time “stimulus” funds in 2009 dried up. ARPA funds should also be separated from Texas’ base budget. And lawmakers should post the allocation and distribution of funds on a website.

The Legislature is in the final two minutes of the fourth quarter. This is where champions are made. Let’s ensure Texas taxpayers win the day with a responsible game plan, rather than irresponsibly spending ARPA fund.

Commentary: www.texaspolicy.com/remember-the-taxpayers/

Congress is attempting to force through massive tax, spending, and debt hikes that would fundamentally transform America into something it is not and cannot afford.
Key points:

• President Biden and congressional Democrats seek to spend another $6.2 trillion over the next decade, spread across at least two bills that comprise their “Build Back Better” plan.
• This plan includes heavy taxing, spending, and debt, which contributes to reducing growth rates for GDP, employment, income, and capital stock.
• Compared to baseline growth over the next decade, this plan will result in estimated dynamic economic effects of 5.3 million fewer jobs, $3.7 trillion less in GDP, $1.2 trillion less in income, and $4.5 trillion in new debt.
• These taxes threaten to reverse the economic recovery, with families having less income and more debt.

​I don’t know the story behind the clean two-story home on Goldfinch Lane in Montgomery County. But I know enough. Soon, attorneys will sell the property on the fourth floor of the Commissioners Court Building in Conroe. In this white-hot real estate market, it will likely to go investors.

What it means is that at some point, a family couldn’t keep up with the property taxes. And now the foreclosed home, valued at $171,180, will go to the highest bidder in the county’s monthly tax sale. Did it involve an illness? A death? It doesn’t matter now.

This is a threat that hangs over every homeowner in Texas—and every business owner who holds the title to the property they do business on. Texans will never experience the peace of mind that comes with owning their homes until property taxes are eliminated. Until then, Texans are simply renting their homes from the government, always with the fear that taxes could become so exorbitant they can no longer afford to stay.

But we have a plan. Our “Lower Taxes, Better Texas” plan will eliminate property taxes for every Texan by 2033 (or sooner), while also making structural changes to our system that prevent year-to-year spikes in tax bills. At the same time, we’ll rein in irresponsible local government spending.

Texans need and want real property tax reform. In recent polls, 82% of Texans said property taxes are a serious issue and 7 out of 10 said they would be upset if the current legislative session ended with nothing done to lower their property tax bill.

Even the media agrees.

“Older Texans on fixed incomes, even those with senior exemptions and freezes, too often end up being priced out of their homes,” a recent Dallas Morning News editorial noted. “Young first-time homebuyers are priced out of homeownership and stay in apartments where monthly rents are rivaling monthly mortgages.”

How does our Lower Taxes, Better Texas plan work? It’s a three-pronged approach.

It begins with controlling the driving force behind tax hikes—increased spending. The Legislature has already enacted a new spending limit based on a formula using population growth and inflation, and any surplus general revenue must first be used to reduce property taxes. This surplus can be used to buy down school district maintenance and operations (M&O) taxes.

And that’s the second prong: Lawmakers now must pass Senate Bill 1 and House Bill 90, which will ensure that those surpluses are used to buy down property taxes now, and in the future. SB 1 would spend the current surplus on property taxes, and with this precedent, HB 90 would require that future Legislatures allocate at least 90% of any future surplus to the same cause.

Finally, legislators should pass House Bill 91 (with a few key amendments). We must redesign the state’s tax code so that local governments are funded primarily by sales taxes. This redesign would broaden the base of goods and services covered by the sales tax while lowering the rate. The result would be to finally eliminate school M&O taxes after years of cutting them.

Critics say lower-income Texas families would be hurt by reliance on sales taxes, but they fail to consider that we all pay property taxes—even if we’re renters. Higher property taxes get passed along—property owners aren’t in the rental business to lose money. And a slight broadening of the sales tax base will allow us to keep the exemptions—such as food and medicines—that make sense for Texas families.

Besides, once property taxes are eliminated, that surplus can then used to buy down sales taxes.

In September, Texas Gov. Greg Abbott added property tax reform to the third Special Session agenda. Legislators can act now to ensure Texans can keep their homes for generations to come.

I’ll probably never know why that Montgomery County home sits empty. But by itself, it tells a story—one we must work to ensure doesn’t get repeated again and again. Let’s stop taxing Texans out of their homes.

​The growth of the economy, as measured by Montana’s population growth plus inflation, provides a measuring stick for fiscal responsibility by accounting for potential changes in economic conditions indicating the demand for government services and the cost of providing them. This benchmark also helps account for more people and higher wages, which, combined, provide resources for taxpayers’ ability to pay to fund government expenditures.
Montana leaders have pointed to the growth of population growth plus inflation as the fairest measure for government growth.

Paper

www.texaspolicy.com/reconciliation-bill-is-an-assault-on-marriage-and-families/​Marriage is already tough enough; fewer and fewer Americans are even attempting it, and while divorce rates are down slightly, that may only be a temporary side effect of the pandemic. Yet the evidence is clear—marriage is the not-so-secret ingredient for success in life, for men, women and especially for children.

But marriage is about to become even harder. Congress’ massive reconciliation bill, clocking in at more than $5 trillion, is riddled with provisions that undermine society’s most fundamental institution—the family. From multiple marriage penalties to taxes that will prevent parents from passing businesses and farms down to their children, to lower household incomes paired with higher prices (financial stress is still the primary cause of divorce), the bill makes marriage more expensive and even cost-prohibitive in some cases.

We’ve long known that fiscal policies can have a big effect on marriage rates. Chief among these policies are welfare programs.

“A safety net marginally reduces the costs of single parenthood, nonmarital childbearing, and divorce,” a U.S. Congress Joint Economic Committee report said in 2020. “It also can create a significant tax on marriage because the addition of a spouse with income typically reduces safety net benefits, and if he has only modest earnings or unsteady employment, the trade-off may not be worthwhile.”

But Congress and the Biden administration are doubling down on such policies. If the reconciliation bill passes, marriage will be even less advantageous to couples and to children.

Let’s look at a few examples of how.

First, multiple marriage penalties are found in the bill. A marriage penalty occurs when tax liability for a couple increases after the wedding because of differences in tax bracket thresholds, deduction limitations, and other aspects of the tax code. Some couples could find nearly all of one spouse’s income now subject to a higher tax rate. Marriage penalties in the proposed structure can total $130,200 annually in higher taxes.

Estate taxes are another way the reconciliation bill chips away at a family’s opportunities. Family businesses and family farms will be severely penalized upon the death of a parent. The federal estate tax, also known as the death tax, currently applies only to estates valued over $11.7 million, with the top marginal rate at 40%. Democrats would lower the exemption by $8.2 million and increase the top marginal rate to 65% while also introducing a tax on unrealized capital gains. The total tax rate on an estate can easily climb over 70%, even on relatively modest estates.

One former Democratic senator says hiking the estate tax is a mistake. “I’m trying to sound the alarm, both economically and politically, for Democrats that this is not a path to walk,” says Heidi Heitcamp of North Dakota. “The disruption that it would create for small family business and farmers and family assets is not worth the pain.”

The bill will also result in fewer jobs and lower household incomes. Our analysis shows that the “Build Back Better” plan (as the Democrats are now euphemistically calling it) will reduce employment by the equivalent of 5.3 million full-time jobs.

And it will reduce incomes. Despite the Biden administration’s repeated promise to not raise taxes on those earning less than $400,000 a year, there are many implicit and even explicit tax increases on that group. Aside from the bottom quintile, those who earn under roughly $20,000 a year, all income groups will see their after-tax incomes decline as a result of the Democrats’ tax agenda, through a combination of direct and indirect taxation, as well as reduced income from lower economic growth.

Combined with runaway inflation due to the Democrats’ love of modern monetary theory, the pressures on married couples and other families will only intensify.

As historian Will Durant pointed out, “The family is the nucleus of civilization.” It’s our most basic institution. We can’t build back better on top of its ruins. Congress must reject the reconciliation bill.

Commentary

​America is back at the brink—Congress has borrowed as much as it can legally, and House Speaker Nancy Pelosi says if it doesn’t raise the debt ceiling, the U.S. will be forced into default.

But the truth is that the full faith and credit of the U.S. is at stake because of excessive spending in Washington. Republicans should demand changes that rein in spending, the real danger to our economy, made much, much worse by the Democrats’ latest $5 trillion for part of the so-called “Build Back Better” plan allocated to “human infrastructure” spending (the reconciliation bill).

As our friend Stephen Moore highlights, the Democrats own this crisis—and in the last six months, they’ve proposed $11 trillion of spending. Their spending, especially as outlined in the reconciliation bill, would further bankrupt the U.S. and fundamentally transform our nation—and not for the better.

From its privileged perspective over on K Street in D.C., the Washington Post opines that “this is not Ronald Reagan’s Republican Party.” It cites past debt ceiling battles and claims that congressional Republicans “are inviting economic calamity.”

It’s true that Republicans have raised the debt ceiling in the past. But in key instances, such as the 1985 Gramm-Rudman-Hollings Act (under Reagan himself), raising the ceiling was accompanied by a plan to reduce the deficit. Deficit hawks leveraged the debt ceiling vote to force the big spenders in Congress to face the facts—deficits add up, as our current $28.8 trillion national debt shows. They haven’t achieved this every time—there have been far too many “clean” debt ceiling bills that included no reforms—but enough to show us the way now.

That’s why it’s unreasonable for Speaker Pelosi to suddenly rediscover bipartisanship, as she calls for Congress to “come together” to enable her profligate spending. The GOP members of Congress who watched her rip up President Trump’s speech in 2020 know that the Speaker Pelosi of 2021 will not even listen to their concerns about the ceaseless printing of money at the Federal Reserve, about the inflation pressing us all, or about the future generations who will have to pay all of this back.

What should Republicans do? Stand fast. Be firm. Don’t bend. And support reforms that save America. The Democrats don’t have a great track record on their apocalyptic warnings, so the GOP shouldn’t fall for this one. There are three possible outcomes here, and the biggest disaster would be Republican acquiescence.

First, the Democrats can raise the debt ceiling themselves—they have the votes, in theory. They might have to convince their saner members, such as Sen. Joe Manchin of West Virginia, but with Vice President Kamala Harris breaking a tie, they would have the 51 votes they need.

From a GOP perspective, this would have advantages. As my colleague Wesley Coopersmith points out, Democrats would then completely own the deficit, and every dollar they make rain on their pet projects would weigh against President Biden’s legacy.

A second possible outcome is what Sen. Machin could force—a “strategic pause” of the reconciliation bill. As Sen. Manchin points out, “making budgetary decisions under artificial political deadlines never leads to good policy or sound decisions.” The political calculus is changing, and Democrats in leadership know this. In these circumstances, a pause can sometimes be as good as a “no.”

The third outcome would be Republicans caving to the pressure from Speaker Pelosi and Senate Majority Leader Chuck Schumer, voting to increase the debt ceiling and thereby taking some ownership in not only the higher debt limit, but also the massive spending it will enable.

So let the Democrats fight it out themselves. In the meantime, Republicans should sign on to our Responsible American Budget—a key cure for what’s wrong in Washington right now.

Irresponsible government spending damages the productive private sector through redistribution of resources, higher taxes, higher price inflation, and higher interest rates, reducing Americans’ real incomes, job opportunities, and prosperity.

At the state level, Texas has addressed runaway spending with the Conservative Texas Budget. Its main premise is that government shouldn’t grow any faster than the average taxpayer’s ability to pay for it. To provide a bright line marking the limit, we use a proven, simple formula: population growth plus inflation.

The Responsible American Budget would use this success as a model to help save America. Because high taxes and debt are always and everywhere a government spending phenomenon, this proposal is a valuable step toward limiting the footprint of government, allowing Americans more opportunities to flourish.

Commentary

​Texans’ livelihood is improving after much destruction from forced business shutdowns by governments in response to COVID-19. Recently, some normalcy returned as the Texas economy was fully opened on March 10, 2021, contributing to less unemployment and an improved civil society. The regular and second special sessions of the 87th Texas Legislature supported this normalcy, with wins of sound fiscal and regulatory legislation, more paths to opportunity, and another Conservative Texas Budget. More successes may be realized during the third special session called by Gov. Greg Abbott by advancing more pro-growth policies to spend responsibly and eliminate property taxes thereby supporting the recovery and withstanding Washington’s anti-growth policies.

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​At least in baseball, you’re out after the third strike. Baseball is merciful. The Texas Legislature, not so much. At least the fourth legislative session—the third special—gives lawmakers a chance to appropriate money sent to the state by Congress through the $1.9 trillion American Rescue Plan Act (ARPA) of 2021.

The Legislature has kept spending in check so far this year, but these funds present a new temptation. Lawmakers must resist—and spend the ARPA money wisely.

They’re off to a good start.

The Legislature passed the 2022-23 state budget well below TPPF’s Conservative Texas Budget (CTB), which sets a maximum threshold on the budget based on the average taxpayer’s ability to pay for it (as measured by population growth plus inflation). And lawmakers left $12 billion in the state’s rainy day fund.

Staying fiscally conservative while meeting the needs of taxpayers is nothing new for Texas. The last four budgets since 2015 passed by lawmakers have averaged growth under the CTB limit, helping keep more money in taxpayers’ pocket.

Let’s keep that going with the ARPA money. Here are some priorities Texas legislators should consider.

ARPA funds by Congress to state and local governments in Texas totaled $41 billion, with $25.2 billion either already released or allocated for specific purposes. Nearly $16 billion in more flexible funding will head to the state in one payment because Texas’s unemployment rate is more than 2 percentage points above the pre-pandemic rate. This part is 13% of the state’s annual budget for legislators to determine what’s best for Texans.

Remember, this is a one-time payment. It’s not an excuse to irresponsibly add nearly $16 billion in additional appropriations in the next biennium. Given that this is allocated wisely, we will exclude this amount from the CTB limit so that the budget is not inflated for excess spending later while catching ongoing spending in the next budget cycle if necessary.

We should use the majority of this to pay off our outstanding balance with the U.S. Treasury’s Unemployment Trust Fund. Texas holds the third largest balance, behind only New York and California. We’re $6 billion in the hole and we need to replenish $2 billion in credit the state had prior to the pandemic. The outstanding balance continues to accrue interest, costing Texans millions of dollars that could otherwise be used elsewhere.

Depending on the amount needed, we should use about $5 billion in ARPA funds directly or those swapped out with state general revenue to complete the border wall—providing relief to Texas taxpayers who have been paying for the rising cost of the crisis along the border for the rest of the nation.

And with burdensome local property taxes continuing to climb, we should be finding ways to eliminate them as quickly as possible. A good way would be to add what was done in 2019 and maintained in the 2021 regular session by using the remaining amount to compress school district M&O property taxes in the 2022-23 school year for additional tax relief.

Adding what could be billions more in surplus funds after appropriations in the second special session, including $100 million in property tax relief to some Texans,  there’s an opportunity to provide even more compression so that Texans receive a lower property tax bill.

Since property taxes are technically local taxes, this could be a way to navigate around the unwise restrictions imposed by Washington.

To ensure accountability and transparency within the Legislature, the flexible ARPA funds should be separated from the base budget to avoid it being buried within future appropriations.

This would limit any possibility of a repeat from Democrats who argued there were “cuts” to education following Obama’s one-time “stimulus” funds. Regardless of whether these measures are taken, all related ARPA spending should be posted on the Comptroller’s or Legislative Budget Board’s website.

There are other good ideas on how to use ARPA funds, but they may be restricted due to federal regulations—which is why there should be more clarity from the Treasury.

This fourth session gives lawmakers the opportunity to allocate the ARPA funds; they should be spent wisely.

Commentary

Economic freedom hit a record high in 2019—but then came 2020. That’s when government shutdowns limited economic freedom, with devasting impacts to people’s lives and livelihoods.

According to the 2021 Economic Freedom of the World Report, which measures economic freedom according to a number of economic variables, the global average for economic freedom hit a new high at 7.04 out of 10 in 2019, the most recent comprehensive data. But that’s going to fall in 2020 data from COVID-related restrictions and sky-high government spending.

Let’s first consider the benefits of economic freedom.

The top quarter freest nations have annual GDP per person over $50,000 (purchasing power adjusted), compared to under $6,000 in the quarter least free nations. The average income of the poorest 10% in the freest nations is more than $14,000, compared to the least free nations at under $1,600. In the least free nations, one out of every three people lives in extreme poverty ($1.90 a day) compared to less than 1% in the most-free nations.

And economically free nations have increased life expectancy, better health care, more educational achievement, and higher levels of happiness. Research has shown that happiness is driven even more by economic freedom than the increased prosperity it generates. People care about self-sufficiency, and the opportunities to attain it are more plentiful in places with more economic freedom.

During the financial crisis of 2007-2008, economic freedom declined globally. Governments responded with increased spending (as they would later respond to the COVID-19 pandemic), though with noticeable differences between advanced and emerging economies. For example, from 2007 to 2010, advanced global spending increased by 16% compared to 53% in other economies.

As the financial crisis receded, economic freedom recovered and moved to new heights. In 2007, the average economic freedom score was at its highest level ever, 6.90. It fell to 6.86 in 2009 as governments expanded their powers and spending in response to the crisis. By 2011 it had recovered to 6.93, edging out the score at the beginning of the crisis, and continued to increase.

Global growth resumed as economic freedom recovered.

While comprehensive 2020 data aren’t available yet, fiscal projections by the International Monetary Fund (IMF) indicate economic freedom took a huge hit from the extraordinary actions by governments.

Excessive government spending reduces economic freedom by crowding out people’s decisions in the productive private sector. To fund deficits now or later, governments consider raising taxes or just printing more money. Unfortunately, these actions make the problem worse, especially to the neediest among us, as the answer should be more opportunities to prosper through less spending—the true burden of government.

The IMF’s data show advanced economies being more profligate than other economies in spending this time around. Average spending increased by 28% between 2019 and 2021 in advanced economies while developing economies lagged at 12% for a world average of 21%.

Overall, government deficits increased by 280% in the advanced world, and 71% elsewhere, doubling global deficits. Gross government debt rose from 104% of GDP to 123% in advanced economies and from 54% to 64% elsewhere. These results threaten human flourishing worldwide.

In the U.S., America had a record low poverty rate and record high median household income in 2019. This was a result of increased economic freedom from the last administration’s deregulatory and tax cutting efforts. The unemployment rate reached new lows for almost every demographic and the overall rate was at 3.5% in February 2020.

As shutdowns happened across the country, the national unemployment rate skyrocketed to 14.8% in April 2020 and remains higher at 5.2% today. And many of those who have a job have seen their purchasing power fall due to higher inflation. Costly shutdowns and excessive spending have hit Americans’ lives and livelihoods hard, and these will have long-lasting effects.

Clearly, control by government through shutdowns over the last year caused much economic destruction. The already-passed $6 trillion in spending since the shutdown recession started is more spending than every economy except the U.S. and China. And this excess spending already contributed to a tripling of the deficit to $3.1 trillion in 2020.

After the Biden administration passed its excessive $1.9 trillion American Rescue Plan Act, it’s calling for an additional $6 trillion in “infrastructure” proposals (something Americans can’t afford).

Fortunately, we have a sound blueprint of what works well for increased opportunities to let people prosper: economic freedom through free-market capitalism. We need more of it now.

https://www.texaspolicy.com/economic-freedom-hit-record-high-globally-before-the-shutdowns/

These data provide overwhelming evidence that the Texas Model of inclusive institutions with a relatively low tax-and-spend burden, no individual income tax, and sensible regulation provides an institutional framework supporting more job growth, higher wages, lower income inequality, and less poverty than in comparable states and the U.S., in most cases. Other states and D.C. would be wise to consider adopting Texas’s inclusive economic and political institutions that champion individual liberty, free enterprise, and personal responsibility. This is a path to providing an economic environment that allows entrepreneurs the greatest opportunity to thrive and for prosperity to be generated for the greatest number of people, especially the neediest among us.

Despite this success, improvements are needed to keep the Texas Model competitive and create even more opportunities for all to flourish. These improvements to Texas’s institutional framework include limiting the growth in government spending at all levels, eliminating the state’s onerous burdens of property and franchise taxes, reducing barriers to international trade, relieving people from burdensome occupational licenses, and reforming safety nets.

Even with these needed improvements, the historical data overwhelmingly show it has not been a miracle in Texas, but rather abundant prosperity generated by Texans from a proven institutional framework called the Texas Model.

One Pager

OVERVIEW: Governments’ forced business closures and mandates in response to COVID-19 since March 2020 resulted in much economic destruction during the “shutdown recession.” A return to normal is essential for the recovery of economic growth and, more importantly, for the flourishing of people’s lives and livelihoods. However, more government
intervention in response to the Delta variant and reckless fiscal and monetary policies out of D.C. are hindering the recovery. The labor market has been improving more slowly than expected even though Congress has authorized
$6 trillion since the pandemic started and may soon authorize another $6 trillion, while the Federal Reserve has doubled its balance sheet to $8.4 trillion. The federal unemployment “bonuses,” which finally ended recently, and even more
in handouts, which have reduced incentives to work, resulted in the record high number of job openings exceeding the number of unemployed and added to the recovery’s uncertainty. Instead, we need a pro-growth approach.

https://www.texaspolicy.com/the-ginn-economic-brief/ 

​The economic success of the Texas Model’s limited government framework demonstrates that institutions matter for prosperity. But Texas must improve to remain competitive and support greater flourishing

​Texas owes $7 billion to the U.S. Treasury’s Unemployment Trust Fund.

Lawmakers here in Texas can pay off that balance entirely, without any interest charges, and without using any state funds. The only catch is that the Texas Legislature and governor would need to do so by Sept. 6, so that’s unlikely—but they can keep the cost low if they take action soon.

Unemployment insurance is a surprisingly complicated, convoluted program.

Few people understand how it works, who pays for it, how benefits are calculated for the unemployed, or who even qualifies for benefits. Congress has added even more complexities and confusion to the program over the last year and a half with bonuses, extensions, and more. There are also substantial differences between states.

While the full details of the entire unemployment insurance program could fill a textbook, here are the basics.

Businesses pay payroll taxes which finance a trust fund for each state held at the U.S. Department of the Treasury. The program is overseen by the U.S. Department of Labor. States then use this trust fund to help pay their unemployment claims. As states’ balances in the trust fund rise and fall, the individual states adjust their business tax rates to try and maintain an adequate volume of funds with the U.S. Treasury.

If a state’s account runs dry, as can happen in a severe recession, the Treasury will loan the necessary funds to that state at a variable interest rate. The state must then repay the borrowed funds, along with the interest charged to its account. Furthermore, the state must also replenish the previous balance with additional funds.

The government-imposed shutdowns over much of the last 18 months, along with other misguided policies, created sky-high unemployment in many states, including Texas. Unemployment claims skyrocketed and this quickly depleted the state’s $2 billion trust fund account. After those savings were expended, Texas had to borrow billions of dollars from the Treasury to continue paying claims.

The Lone Star State has the third largest outstanding balance with the Treasury. New York, despite having fewer people, managed to dig itself an even deeper hole, racking up more than $10 billion of red ink in its ledger with the Treasury at the time of this writing. California is in even worse shape, by a large margin. The Golden State owes a massive $25 billion to the Unemployment Trust Fund.

Fortunately, the Texan economy has improved, and the state has not borrowed additional funds from the Treasury for months. With the bleeding stopped, it is now time to address the $7 billion hole along with replenishing the $2 billion credit that the state had with the Unemployment Trust Fund before the pandemic. That is a grand total of $9 billion which should be allocated to this problem.

In normal times, Texas would have no choice but to drastically increase taxes on businesses to raise the needed revenue to cover this hole. But these are not normal times.

Congress has allocated $41 billion for Texas as part of the American Relief Plan Act (ARPA) and the Treasury Department has issued guidance to the states that the funds can sent to the Unemployment Trust Fund. Texas has the money to fund this problem—state lawmakers only need to appropriate the ARPA funds.

Time is of the essence because the Treasury has temporarily waived all interest on outstanding balances with the Unemployment Trust Fund, but that is set to end Sept. 6. Even a low interest rate will still create millions of dollars in interest charges because the state’s balance is in the billions of dollars.

While the second called Special Session just ended, the upcoming third called Special Session is when the Legislature should immediately allocate the roughly $9 billion out of the almost $16 billion in the flexible ARPA funds available.

Delaying this payment past Sept. 6 will unfortunately cost taxpayers millions of dollars, which could otherwise go to tax cuts, roads, or education.

Texas is one of 14 state accounts with an outstanding Unemployment Trust Fund balance that together total more than $56 billion. West Virginia has repaid its balance with the Treasury and so will not pay any interest. Texas lawmakers can save their constituents millions of dollars in interest charges, but only if they act quickly.

While Sept. 6 will likely come and go without payment (though maybe action at the federal level could delay it further), this bill is coming due and Texas should plan accordingly.

Commentary

​If you’re poor and reside where there’s little economic freedom, then you have fewer opportunities to improve your livelihood compared with those living in more economically free places. The freedom to have the flexibility to control your future and leave a legacy to future generations with little influence by government supports human flourishing.

This too-often overlooked fact is supported by the just-released study, “Economic Freedom Promotes Upward Income Mobility,” published by Canada’s Fraser Institute and prepared by Justin Callais, Texas Tech University, and Vincent Geloso, George Mason University.

Income inequality continues to be a divisive economic issue, with opponents of freedom blaming free markets for it. Yet, income inequality is no more prevalent in economically free nations than nations dominated by government intervention.

But there is a crucial difference that separates economically free nations from others—one at the heart of fairness and equity. And that is opportunity. The Institute’s new research shows income and social mobility are significantly stronger in free than in unfree places.

The study looks at 82 nations, utilizing mobility data from the World Bank and World Economic Forum, and freedom data from the Institute’s “Economic Freedom of the World Index.” The conclusions match other data noting that prosperity is much higher and poverty much lower in economically free nations.

The average per-person output in a top-quarter economically free nation is more than $50,000 (purchasing power adjusted) compared to under $6,000 in the quarter of least-free nations. The average income of the poorest 10% in the freest nations is over $14,000, compared to the same numbers in the least free nations reported to be just 11% of the freest nations at under $1,600.

While the study examines income mobility internationally, economic freedom spurs greater income mobility among the U.S. states. The higher level of in-migration to economically free states is best explained by people moving to seek greater opportunity.

The Fraser index includes several factors necessary for economic freedom, but the two most important for income mobility are the rule of law and reasonable regulation. Since the rule of law is relatively—if not completely—uniform across U.S. states, regulatory burdens help tell the story of migration flows.

The U.S. ranks 6th most economically free among 162 jurisdictions considered worldwide. Rankings among the largest states in terms of population and economic output (California, Texas, Florida, and New York) reveal a stark difference.

Both Texas and Florida, with their approaches of more limited government, rank in the top four among U.S. states in terms of economic freedom, whereas California and New York, which choose a heavy-handed governing philosophy, fall in the bottom 4 states.

Narrowing down the broader ranking to just the regulatory burden, which the study finds influences income mobility, the rankings are similar for these states. Ranking near the top are Texas at second best and Florida at 10th while California is at 35th and New York ranks 44th. Government spending per person is also much lower in these red states.

Taking these factors along with better fiscal policy into consideration, and no wonder people are moving in droves for improved opportunities from these dark blue states to these dark red states. This has also meant increases in state income and wealth from migration. Interestingly, despite what’s commonly suggested, polling data show that this migration isn’t soon to flip Texas blue soon.

Regulations too often exclude people from work and opportunity. They may require workers to purchase occupational licenses or train to acquire credentials before they can work. This takes time and money, which lower-income earners may not possess, creating a barrier that prevents them from fully participating and advancing in the labor market.

Such regulations slow wage growth for lower-income workers. And particularly, occupational licensing tends to hurt income growth among the poor more than those with higher incomes. Onerous business and hiring regulations can also slam the door shut on poor entrepreneurs who simply do not have the resources to satisfy government’s many hurdles.

Yet, many seem to believe free markets victimize people. But that’s simply false. Free market capitalism best lets people prosper.

Just look around the world. Where would a person rather live, even if they were poor? In economically free places like the U.S., Canada, Denmark, Texas, or Florida or unfree places like Russia, Egypt, California, or New York, or socialist basket-cases, Venezuela and Cuba?

Free markets continue to face many challenges following the 2009 recession, the COVID-19 pandemic, expansion of government overreach, and the evidence-free imaginings of free-market critics. Hopefully, the facts like those in this report will win out—people are more prosperous, less poor, and blessed with opportunity where economic freedom prevails.

Commentary

​The national debt is rapidly nearing $29 trillion, which is 25% more than our entire economy, and is orders of magnitude higher if you consider unfunded liabilities of Social Security and Medicare. This threatens life as we know it and must be addressed now.

Since the start of 2020, the debt has increased by $5.2 trillion. And President Joe Biden has called for $6 trillion in new spending along with massive tax hikes that will hinder growth and add trillions more in debt. The most recent spending plans are the $1.2 trillion “infrastructure” bill, which is really a green-energy boondoggle, and the at least $3.5 trillion reconciliation package that has been described as “human infrastructure,” which greatly expands the welfare state.

This expansion of the welfare state is far more than President Franklin Delano Roosevelt’s New Deal or President Lyndon B. Johnson’s Great Society. Although these initiatives likely had good intentions, the results were a disaster with the former driving the Great Depression deeper and longer and the latter contributing to greater dependency and rising structural deficits.

President Biden’s Green New Deal would fundamentally transform America into something it is not, nor can it afford to be. Many progressives argue that the federal government can continue to deficit spend without consequence. While we expect this from progressives, where are the conservatives?

Both political parties share the blame for the rising burden of government that comes from excessive government spending.

For example, 19 Senate Republicans voted for the $1.2 trillion “infrastructure” bill that spends than 10% on conventional infrastructure such as roads and bridges.

The political calculus of this maneuver by Republicans is awful and troubling as Americans need elected officials to take fiscal responsibility seriously now. A great example is that by President Calvin Coolidge, who believed in the morality of a limited government and was the ultimate budget hawk.

Coolidge, along with his predecessor, President Warren Harding, made cutting government spending a priority. When Harding assumed office, he was confronted with the Depression of 1920-1921 and his response was to fight it by removing government obstacles of excessive spending and taxing, which helped get the U.S. out of that situation in a hurry. After Harding’s death, Coolidge continued Harding’s pro-growth fiscal conservatism as Coolidge regarded “a good budget as among the noblest monuments of virtue.”

For Coolidge, keeping a balanced budget with spending restraint and reasonable tax rates was not just sound economic policy but moral and constitutional, as it supported increased economic prosperity along with preserving life, liberty, and the pursuit of happiness.

Under President Coolidge, federal spending decreased by 0.4%, from $3.14 billion in 1923 to $3.13 billion in 1928. This means the budget declined by even more in inflation-adjusted terms and resulted in spending as a share of GDP declining from 3.7% to 3%, which compares with the astronomical $6.6 trillion for nearly one-third of GDP in 2020. As a result of cutting spending, Coolidge was able to lower the top income tax rate to 25% in 1926, as he noted that “You can’t increase prosperity by taxing success.”

The spending restraint, tax cuts, and faster economic growth helped the federal government run a budget surplus every year for a cumulative cut in the national debt over those seven years of $6.1 billion. As a result of Coolidge’s fiscal conservatism, the nation experienced the Roaring ‘20s because free-market capitalism was allowed to work much more than today.

“The very fact that the federal government has been able to cut down expenditures, decrease its indebtedness and reduce its taxes indicates how great is the accomplishment which you have made on behalf of the people of the nation,” noted Coolidge.

Although the budget has changed since Coolidge was in office, Amity Shlaes, noted historian and Coolidge biographer, wrote that “the pressure to expand programs was as strong [then] as it is today.”

Policymakers should follow Coolidge’s example and reduce spending. States such as Texas and Iowa have also proved that fiscal conservatism works, so the federal government should now do the same. The Texas Public Policy Foundation’s Responsible American Budget provides a blueprint to restoring fiscal sanity in Washington.

Excessive government spending and the national debt cannot be ignored. If America doesn’t change course quick, there will be catastrophic results for Americans and Western Civilization. This is not just dangerous; it is un-American and something that will keep us from leaving a legacy to be proud of.

We need Calvin Coolidge’s fiscal conservatism more than ever.

Commentary

​As if the $1.2 trillion “infrastructure” bill in Congress could not be worse, a closer look shows that among other bad ideas there is $125 million allocated  to fund the creation of pilot programs to evaluate a federal vehicle miles traveled (VMT) tax.

The idea behind the VMT tax is to tax drivers for every mile they drive, which could address both traffic congestion and the increasing supposed shortfall in the Highway Trust Fund. This shortfall is caused in part by lower gas tax revenue (lower than some desire, that is) due to more fuel-efficient vehicles and the increased use of electric vehicles (EVs) that don’t pay fuel taxes, as well as by inflated costs of building and maintaining roads and bridges.

How would a VMT work? In short, it won’t. But let’s play along with the fantasy.

One method would be to require a GPS device in every vehicle which would transmit your vehicle’s data to the federal government. Thankfully, in 2012, the Supreme Court ruled that such a requirement would be unconstitutional.

A second method would be annual odometer readings done at vehicle inspections; this would likely just incentivize fraud. The IRS would have to assume the responsibility of auditing the odometers of roughly 289.5 million registered vehicles. Doesn’t that sound fun?

Oregon and Utah are two of the first states to launch state-level pilot programs.

Oregon’s VMT tax trial participants have three options to sign up for—two privately run systems and one administered by the state’s Department of Transportation. The private companies allocate devices to drivers which log location and distance travelled, then send out tax bills and remit the taxes to the state.

State programs operate on a small scale, while the proposed national system would require the feds to track hundreds of millions of vehicles.

Remember, the federal government does not have $1.2 trillion available, as some of the bill is being funded with unspent, previously authorized funds, but the new spending could add at least $250 billion to an already bloated national debt. Despite President Biden’s call to ease the financial burden on America’s lower-income earners, these policies will prove to be most detrimental to them.

Consider the ongoing 2018 Two-Hundred lawsuit against the California Air Resources Board (CARB) aimed at stopping the implementation of its multi-billion dollar “scoping plan.” The plan’s goals included a “net zero” emissions requirement, a numeric per capita threshold, a mandated VMT tax, and a “vibrant communities appendix.” The costs to fund this plan disproportionately harm low- and moderate-income families and negatively influence the state’s economy.

Such policies continue to drive up housing costs, contributing to their homelessness problem.

VMT taxes will place an additional financial penalty on low-income families who can’t afford to—or choose not to—live in urban centers. Urban inhabitants are forced to move out of urban areas, then charged even more for doing so by imposing a tax on lengthy commutes.

Gas and VMT taxes create an unnecessary burden on taxpayers, as they are funneled through third-party channels, increasing the costs. They also discourage driving, which will inevitably hurt employment and upward mobility. Both taxes increase the price of consumer goods and have a negative impact on economic growth.

The U.S. shouldn’t impose a VMT tax to make up for a lower gas taxes collected. Instead, transportation spending should come from general revenue, which it has since 2008. Also, more affordable ways of providing transportation should be considered instead of repeating the same costly mistakes.

The federal government needs to quit piling on new taxes and subsidies that hurt those most who can least afford less opportunities available to flourish. Instead, Congress should focus on unleashing the power of the free market to make energy (which affects everything we do) more affordable.

It is time to reexamine why such a large transportation-related deficit is automobile-centered and face the fact that it is unsustainable. Adding and raising taxes thrusts our constitutional republic towards an autocratic order, which along with irresponsible spending should be rejected in favor of responsible spending that better helps all Americans, especially low-income earners.

Commentary

​By administrative fiat, federal bureaucrats in the Biden administration at the U.S. Department of Agriculture (USDA) recently expanded food stamp handouts by almost 30%.

Yes, you read that correctly, your taxes are going to go up to pay for expenditures your elected members didn’t vote on.

And the expansion of these handouts from the Supplemental Nutrition Assistance Program (SNAP), while supposedly helping the less fortunate, too often creates dependency and sets people up for failure—much like many government programs. The success of welfare programs should be measured not by how many people are added to them but by how many people graduate off them and live prosperous lives.

With just a moderate work requirement and some eligibility reform, SNAP spending was curtailed by 16% as enrollees declined by 19% from 2016 to 2019. However, during the pandemic, Congress removed work requirements and left the decision to reinstate those requirements to the Secretary for Health and Human Services.

SNAP handouts were already increased by 15% just five months ago under the guise of temporary pandemic assistance and were set to expire on September 30. Those increases have now been made permanent, along with another 12% increase, for a whopping 27% rise from pre-pandemic levels, by bureaucrats rather than Congress.

A family of four will now be eligible to receive up to $835 a month in SNAP payments, even though they spent, on average, only $537 per month on food at home in 2019. Granted, food prices have increased in the last two years because of inflation, but not by 55%.

One reason for the dramatic SNAP increase is that the USDA is recommending people eat healthier foods, like fresh fruit, which tend to be more expensive. But there is evidence that increased SNAP handouts incentivize unhealthy diets—the opposite of the espoused motivation for the increase. On average, food-stamp recipients spend about one-fifth of their handout on soda, candy, and salty snacks, items which most people would consider unhealthy if not outright junk food.

The USDA is also recommending more daily calories because people now are heavier. You read that correctly—the government is prescribing more food to an overweight patient.

Augmenting SNAP handouts also adds yet another disincentive to working.

There is already a long list of government payments which have contributed to why people remain out of the labor market: normal unemployment benefits, $300-a-week supplemental unemployment in about half the states, up to $3,600-per-child tax credit, rental assistance benefits, expanded health care benefits, and extended weeks of unemployment benefits in many states.

There are also moratoriums on student loan payments and interest, foreclosures, and evictions. Some people haven’t paid their mortgages, rent, or student loans for over a year. When these expenses seemingly vanish and are replaced by gratuitous handouts, why work?

The housing-related moratoriums have set people up for failure since the full amount of unpaid rent and mortgage payments are due the day they expire. Unless a person has managed to stockpile all the missed rent or mortgage payments, that person will soon be looking for somewhere to live.

Similarly, many people with student loan debt have, over the last year and a half, become accustomed to not having student loan payments and have restructured their budgets accordingly. Repeatedly extending the student loan payment moratorium (and other moratoriums) has also created doubts as to when payments will resume. When payments finally do restart, many people will likely be unprepared to make their payments or other budget expenses.

These government handouts have contributed to the 10.1 million unfilled job openings in the country—which is 600,000 more than the total number of unemployed.

While this expansion of SNAP will add to the already gorged deficit, the greater harm is the lost economic activity in the years to come.

Because these programs disincentivize work and trap their participants in a cycle of dependency, they eliminate not only this year’s earnings, but all future earnings for those unfortunate enough to take the bait that is government assistance. That means less national income and fewer jobs filled for years to come.

The answer is simply to do the opposite.

Government assistance needs to be truncated, not augmented. There are more jobs available than people to fill them. A larger welfare state and greater reliance on government handouts are the last things America needs; self-sufficiency and work are the true paths to independence and prosperity.

Commentary

​Let’s call it the Salton Principle: Renaming a product may make marketing easier, but it doesn’t fundamentally change the product.

Who would buy a Salton Grill? We didn’t—and neither did you. But when it was rebranded as the George Foreman Lean Mean Fat-Reducing Grilling Machine, the little countertop grill showed up in homes (and dorm rooms) across America. It was the “hottest new product in years.”

U.S. Senate Democrats didn’t relabel their bloated something-for-every-constituency budget bill “Lean, Mean and Fat-Reducing,” but they may as well have. They now call it the “human infrastructure” plan, costing roughly $5 trillion over a decade. They also labeled their process of forcing through unrelated and unpopular items—from amnesty for illegal immigrants to elements of the Green New Deal—as “budget reconciliation,” co-opting the process and the term in ways that were never intended.

Here’s the truth: The Democrats’ human infrastructure reconciliation bill will greatly expand the role of the federal government in everyone’s lives—for generations to come—and will lead to the combination of economic stagnation and inflation we haven’t seen since the “stagflation” crisis of the 1970s.

Ultimately, American families will have less of everything—except dependence on the federal government, which is not the system of capitalism that has supported our increased freedom and prosperity.

This comes after an unimaginable spending spree so far by Congress. Even before the Senate passed the $1.2 trillion “infrastructure” bill, Congress previously  authorized almost $6 trillion in new spending, allegedly due to COVID-19, and executive actions by the Trump and Biden administrations had authorized almost $1 trillion more. As a result, the federal deficit tripled to $3.1 trillion in 2020 and could be worse this year.

What’s in the reconciliation bill? While we don’t know the exact details until Democrats finish writing the text in mid-September, here’s a rough estimate based on the budget resolution that comes before it. This estimate is from the Senate Budget Committee’s ranking member:

$4.2 trillion in new spending over 10 years, but excluding budget gimmicks this amount could be north of $5 trillion.
Of that sum, $3.5 trillion is mandatory That means it likely never goes away.
$263 billion in discretionary spending.
$390 billion in increased interest on the debt (roughly the size of Israel’s the entire GDP).
National debt held by the public soars to $40 trillion (119% of GDP) by 2031.
Total debt (subject to limit) soars to $45 trillion (134% of GDP) by 2031.
There are tax hikes, of course. As the New York Post reports, “The bill would hike taxes on businesses and incomes over $400,000 while also making the state and local tax (SALT) deduction cap more generous, in effect lowering taxes for some residents of high-tax jurisdictions like New York.”

But there’s so much more in the bill.

Under the guise of “reconciliation” (which is a process that supposed to be used only for truly budget-related items), the Senate is passing a slew of new initiatives—a grab-bag of progressive priorities. Many Democrats are still pushing for an amnesty program, administered perhaps through green cards, to be part of the Reconciliation bill. And the draft resolution includes such things as “free” preschool for all 3- and 4-year-olds and two “free” years of community college for all. But, of course, nothing is free, as these expenditures will come at a high price tag to taxpayers.

There are multiple elements of the Green New Deal, as well as an expansion of Medicare, Medicaid, and Obamacare.

This vision for America is not the vision Americans have for themselves—stepped up levels of dependency on the government, higher taxes and more burdensome regulations, and less opportunity for working class families to get ahead. This is now what America is supposed to be.

Rebranding doesn’t always work, but Salton’s name change on its little grill got the attention of other appliance makers. Pretty soon, there was an Evander Holyfield Real Deal Grill (among other would-be competitors). But the George Foreman Grill has remained the undisputed champ.

The Democrats, fresh off their own success with the “infrastructure” bill in the Senate, hope for another win with the reconciliation bill. But there’s still time for fiscal sanity that works toward true infrastructure—roads and bridges—and that keeps the federal budget well below the Foundation’s Responsible American Budget.

Republicans—and any responsible Democrats who wish to join them—must work to stop the insanity before the costly repercussions of further inflation, likely stagflation, and a debt crisis put Americans in a world of hurt that no name change can cover up.

Commentary

President Biden and Congressional Democrats have proposed roughly $6 trillion in new spending over a decade of hard-earned taxpayer dollars. To put this into perspective, this exceeds the economic output of every country except the U.S. and China, matches the $6 trillion authorized for COVID-related items since the pandemic—with nearly $1.5 trillion unspent—and exceeds the annual federal baseline budget of $4.8 trillion.
To put it bluntly, this reckless spending will destroy America’s fiscal and economic institutions by pushing us toward insolvency, dependency, and insanity.
The first proposal that the Senate, with some Republican support, recently passed a motion to proceed on is a mostly a progressive wish list of spending. It’s $1.2 trillion on “infrastructure,” with an unfunded $550 billion of it being new spending as the rest are funds previously authorized but not yet spent.
But it has just $110 billion, or less than 10%, for what’s historically been considered infrastructure—roads and bridges. The other 90% is to fund mass transit waste, green energy nonsense, and more items that the states or the private sector could do.
This first proposal should die or at least be cut down to actual infrastructure projects.
The second proposal is a reconciliation package deemed as “human infrastructure” at an astronomical cost of likely $5 trillion over a decade (with little backing documentation on what human infrastructure is).
This proposal will not only dramatically expand the federal government’s role in everyday American life but will contribute to stagflation not seen since the 1970s. It would fundamentally expand people’s dependency on the federal government and destroy the potential of Americans.
Here’s how it spends money we don’t have and turns America into something she is not.
Authorizing Runaway Government Spending

• Congress has already authorized almost $6 trillion in new spending, allegedly due to Covid-19, and executive actions by the Trump and Biden administration has authorized almost $1 trillion
• As a result, the federal deficit tripled to $3.1 trillion in 2020 and is expected to be in the same ballpark this year.
• Instead, we need less spending in the short term and a spending limit imposed based on the Foundation’s Responsible American Budget.

Raising Taxes

• Raising taxes on corporations and investment by $3.5 trillion will decrease our global competitiveness, decrease investment in America and result in less economic growth, fewer jobs, slower wage growth, and higher taxes on many Americans. Despite Biden’s promise to not raise taxes on those earning less than $400,000 a year, this proposal will raise their burden both directly and indirectly, especially for low-income earners.
• These taxes disincentivize saving and investment so much that some tax increases will result in less tax receipts.
• Instead, faster economic growth, more job creation, and faster wage growth can be achieved by reducing taxes and spending.

Driving Higher Inflation

• The general level of prices (CPI) rose 4% over the last year—the largest 12-month increase since August 2008. Meanwhile, real wages fell 1.7% indicating that consumers are worse off.
• More government spending when the Federal Reserve has already doubled its balance sheet and is purchasing over a trillion dollars a year in Treasury bonds will exacerbate existing inflationary pressures and make things even worse.
• Instead, there should be strict fiscal and monetary rules to return to policy normalcy.

Disincentivizing Work

• Much of the newly printed money has subsidized the unemployed, giving the average family of four more than $109,000 in government assistance through September 2021.
• In 19 states, a family of four can currently receive the equivalent of over $100,000 in salary with no one working. Some in Congress want to further expand these handouts and make them permanent, but this will redistribute more from the private sector and trap many people in a cycle of dependency.
• Instead, we must stop disincentivizing work by not extending the federal enhanced unemployment payments and by not making permanent the enhanced child tax credit.

Interfering with Health Care

• The package imposes socialist price controls on prescription drugs which will reduce the number of new drugs introduced into the U.S. market.
• Congress already expanded costly Obamacare subsidies in the last 18 months and expanded Medicaid through emergency powers, and now it plans to expand Medicare. That’s despite Medicare Part A being on track to become insolvent by around 2024.
• Instead, we should increase price transparency, remove unnecessary regulations on prescription drugs, and use alternatives like direct primary care to provide better health outcomes at a lower cost.

Pushing the Green New Deal

• The plan aims to cut total U.S. carbon emissions in half by 2030 and to have 80% of the nation’s electricity come from zero-emission energy sources.
• Fossil fuels currently provide 60% of U.S. electricity, with another 20% coming from nuclear. Completely eliminating fossil fuels from electricity generation by 2030 would reduce global temperatures in 2100 by an immeasurable 042 degrees Celsius.
• Instead, these efforts should be trashed, and an all-of-the-above energy production strategy should be supported that removes obstacles to innovation and adaption.

“Free” Community College

• Tuition at community colleges is relatively low and programs like federal Pell Grants are already available to those who cannot immediately afford the tuition.
• Subsidizing community colleges further will only make these schools more inefficient, just as federal funding for other tertiary schools has caused their costs to explode, especially at the administrative level.
• Instead, students should find paths that best meet their unique needs and that meet the skills demanded by employers. This includes career and technical education along with apprenticeships that typically don’t burden students with debt without job opportunities.

Ultimately, these big-government, green-energy boondoggle, dependency-inducing, tax-and-spend proposals coming out of D.C. should be rejected; They will weaken families, destroy jobs, and hurt our future. Instead, Congress should focus on removing obstacles hindering opportunities for Americans to flourish.

Commentary