Fiscal Policy

The Census Bureau fails to count two-thirds of all government transfer payments to households in the income numbers it uses to calculate not only poverty levels but also income inequality and income growth. In addition to not counting refundable tax credits, which are paid by checks from the U.S. Treasury, the official Census Bureau measure doesn’t count food stamps, Medicaid, the Children’s Health Insurance Program, rent subsidies, energy subsidies and health-insurance subsidies under the Affordable Care Act. In total, benefits provided in more than 100 other federal, state and local transfer payments aren’t counted by the Census Bureau as income to the recipients.

If the Census Bureau had included the missing $1.9 trillion in transfer payments, child poverty would have been only 3.2% in 2017, compared with the official rate of 17.5%. Government transfer payments that were distributed in 2017 had already cut child poverty by 82%. Read More

Working Americans sense that taxes and transfers now leave them little better off than those who work less.

An article on…the most comprehensive accounting to date of how taxes and government payments affect income distribution in the U.S. …The most surprising finding is the astonishing degree of equality among the bottom 60% of American earners, generated in part by the explosion of social-welfare spending… Read More

Researchers gave cash to low-income people. It led them to spend more and work less.

Did pandemic stimulus payments harm lower-income Americans? That’s the implication of a new study by social scientists at Harvard and the University of Exeter.

Liberals argue that no-strings-attached handouts encourage better financial decisions and healthier lifestyles. The theory is that low-income folks become more future-oriented if they’re less stressed about making ends meet. The Harvard study put this hypothesis to the test and found the opposite. Read More

The ‘equally worthy claim’ inexorably prompts further expansion, regardless of lawmakers’ initial limits. Sen. Joe Manchin’s emphatic “no” to the current version of Build Back Better put the bill on life support. Majority Leader Chuck Schumer, having promised a Senate vote, now must try to maintain the bill’s progressive priorities—including a raft of new and… Read More

The federal government’s system of entitlements is the largest money-shuffling machine in human history, and President Biden intends to make it a lot bigger. His American Families Plan—which he recently attempted to tie to a bipartisan infrastructure deal—proposes to extend the reach of federal entitlements to 21 million additional Americans, the largest expansion since Lyndon B. Johnson’s Great Society.

For the first time in U.S. history…more than half of working-age households would be on the entitlement rolls if the plan were enacted in its current form. Contrary to Mr. Biden’s assertion that his plan “doesn’t add a single penny to our deficits,” his plan would add more than $1 trillion to the national debt over the next decade. Read More

Sen. Joe Manchin’s public support Sunday for at least $2 trillion in new spending in a partisan budget bill is a huge win for the political left. This means a giant tax-and-spend bill this year is likely, and the biggest expansion of the entitlement state since the 1960s is now possible.

The entitlements are by far the biggest long-term economic threat from the Biden agenda. Tax increases can be repealed by a future Congress. Spending on infrastructure will slow as funding falls. The courts may block his racial preferences. But entitlements that spend automatically based on eligibility are nearly impossible to repeal, or even reform, and they represent a huge tax-and-spend wedge far into the future.

The media won’t talk about this, and Republicans are so far missing in action. But Americans need to understand the stakes. Read More

The progressive hits keep coming from the Biden Administration, and the latest is the $1.8 trillion American Families Plan introduced in broad strokes on Wednesday. It’s more accurate to call this the plan to make the middle class dependent on government from cradle to grave. The government will tell you sometime later, after you’re hooked to the state, how it will force you to pay for it. Read More