INSIGHTS: REGULATORY DARK MATTER: A HIDDEN TAX ON CONSUMERS AND BUSINESSES
Guest Columnist: Clyde Wayne Crews, Vice President, Policy at the Competitive Enterprise Institute
This week the Competitive Enterprise Institute released a video, “Regulatory Dark Matter,” which explains a new, dangerous tool government bureaucrats are using to circumvent the law and Congressional review of new regulations. There are tens of thousands of executive branch and independent agency actions including guidance documents, proclamations, memoranda, bulletins, circulars, letters and more that are subject to little scrutiny or democratic accountability but carry practical, binding regulatory effects.
Regulatory Dark Matter harms American consumers, entrepreneurs, and job creators because it is hard to find, impossible to count, and difficult to understand.
While Congress focuses heavily on things like tax reform and budgets, they have let their own legislative authority slip away, delegating it to unelected bureaucrats. This has created untraceable regulatory activity that drives up costs for American consumers and businesses apart from taxes.
I invite you to take a minute and watch a brief video to learn more about dark regulatory matter and how regulations are imposed without any debate or any review.
ON THE ECONOMY: PLANETS OF THE UNIVERSE
John Dunham, Managing Partner, John Dunham & Associates
No doubt, no pain, come ever again, well let there be light in this lifetime. In the cool, silent moments of the nighttime. And the planets of the universe, go their way. Not astounded by the sun or the moon, or by the day. You and I will simply disappear – out of sight. But I’m afraid soon there’ll be no light. So ends the song Planets of the Universe written by rock goddess Stevie Nicks in 1977 and originally recorded during the recording sessions for the 1977 Fleetwood Mac album, Rumours. The song was released on Nick’s solo album, Trouble in Shangri-La in 2000 and earned her a nomination for the Grammy Award for Best Female Rock Vocal Performance.
I am a huge fan of Ms. Nicks, and one of the things I love about her is how she often speaks of the consequences of decisions. In nearly every interview she has recorded, she speaks about how deciding to be a rock and roll artist really limited her chance to have a family – something she both misses but understands was a result of her choices. Unfortunately, in America today, people seem to think that they should not be responsible for the consequences of their choices. Banks should be bailed out when then make loans to people with no substantiated income. Taxpayers should pay to rebuild beach houses that were destroyed by common events like hurricanes, and kids should receive trophies even though they don’t take the time to practice and learn how to run, or play football or the flute.
There is even a movement to provide everyone with a so-called Universal Income even when they don’t work. I guess Universal Income sounds better than From each according to his ability and to each according to his need (Karl Marx, Critique of the Gotha Program, 1875).
A recent report put out by the Roosevelt Institute has garnered a lot of press suggesting that a government grant of $1,000 a month per adult for every adult in America would have positive economic effects. I can come up with no other word than ludicrous to describe this idea. Simply put, paying people to do nothing cannot possibly add to economic growth. In fact, the study’s authors admitted as much suggesting that their model was based on three key assumptions. First, the model assumed that the size of the economy is equal to spending. As such, if the federal government borrows a trillion dollars and spends it on basketball tickets for everyone in America, the economy would suddenly be a trillion dollars larger. (See our last Manifesto Article on the Broken Windows Fallacy as to why this makes no sense).
On top of this enormous assumption, the model also assumes that paying people not to work will have no effect on either the labor force nor on government revenues from households that actually do work. In other words, the model pre-supposes that if you pay me not to work, I will work as hard if not harder than I would if I was not being paid to sit around and play video games all day.
Now as we all know, economists can all prove that there is a giant rabbit in the middle of Central Park by first assuming that there is a giant rabbit in the middle of Central Park, but making policy decisions based on insane assumptions is rarely productive. Rather, let’s look at the idea of a Universal Income based on the concept that the Federal Government is already making so many inefficient transfer payments, that simply providing everyone with $12,000 a year would be cost effective.
We have pointed out in the Monthly Manifesto that the Federal budget is nothing more than a big transfer machine anyway. Looking at the most recent figures from the Congressional Budget Office, transfer payments (including both pensions and interest on the debt) accounted for just about two thirds of federal outlays, or just under $2.6 trillion. Considering that the overall adult population in the US (as reported by the Roosevelt Institute) is about 249 million, so currently transfer payments amount to roughly $10,270 per adult – not far different from the Universal Income Proposal. But of this, nearly 9 percent represents interest, something that really cannot be used as part of a Universal Income program, and another 4 percent or so represents government pensions, which should be considered as part of salaries. Removing this from the available transfer payments for a Universal Income program leaves just $9,750 per adult. Of this, about $3,650 is currently being transferred to Social Security beneficiaries and another $4,550 is paying for various health care programs.
So looking at overall transfer payments currently coming from the Federal Government, one can propose a basic income of $9,750 per adult; and grandma and those on public medical programs can pay for themselves.
The bottom line of this is that there is no free lunch in the economy. While it sounds nice to say that in a country as rich as America everyone should have a basic income; it is hard to come up with a way to find more money that is currently being spent on Social Security, Medicaid, Medicare, government pensions, interest on the debt, Food Stamps, and veteran’s benefits, in order to pay for this.
We can assume that there will be no doubt, no pain, and light in this lifetime. But in the cool, silent moments of the nighttime the planets of the universe, go their way. And there will be no money left from those remaining few willing to pay Federal tax rates of 50 percent or more.