Principles Of Government

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Fiscal Policy

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    • How Income Equality Helped Trump

    By Phil Gramm and Robert B. Ekelund Jr. – June 24, 2018

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    By Phil Gramm and Robert B. Ekelund Jr. – 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

    Rising Interest Rates Will Crush the Federal Budget

    By Red Jahncke - June 29, 2022

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    By Red Jahncke – The Federal Reserve’s policies of increasing interest rates and quantitative tightening—reducing its $8.9 trillion balance sheet—will increase the volume and cost of federal government borrowing, slamming the federal budget and exposing the consequences of decades of deficit spending.

    Total federal gross interest cost over the 12 months ending on May 31 was $666 billion. If we include the impending extra interest on Treasury bills and the maturing notes, that figure rises to $863 billion. This is a staggering cost. National military spending was $746 billion over the past 12 months; Medicare spending was $700 billion.
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    How Government Spending Fuels Inflation

    By Tunku Varadarajan and John Cochran - Feb. 18, 2022

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    By Tunku Varadarajan and John Cochran – The present crisis may “reteach our politicians, officials and commentariat the classic lessons that there are fiscal limits, that fiscal and monetary [policy] are intertwined.” It may also teach them, Mr. Cochrane says, “that a country with solid long-term institutions can borrow, but a country without them is in trouble.” Read More

    Entitlements Always Grow and Grow

    By John F. Cogan - Jan. 3, 2022 

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    By John F. Cogan – The seven-decade-long growth of entitlements and the pandemic response are the product of expansionary forces that operate on Congress regardless of who is in charge. Throughout history, the most potent force has been the equally worthy claim. The claim originates from a well-meaning impulse to treat all similarly situated persons equally under the law. Here’s how it works. When first enacted, entitlement benefits are usually confined to a narrow group of worthy individuals. As time passes, groups of excluded individuals claim that they are no less deserving of aid. Pressure is brought by, or on behalf of, these excluded groups to expand eligibility rules. Eventually, Congress acquiesces. But the broadening of eligibility rules only brings another group of claimants closer to the eligibility boundary lines, and the pressure to relax qualifying rules begins again. The process of liberalization repeats itself until the entitlement program’s original limited goals are no longer recognizable. Read More

    How to Stop Politicians From Cooking the Books

    By John Steele Gordon - Sept. 12, 2021

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    By John Steele Gordon – One justification for the Federal Reserve is to keep the power to print money out of the hands of politicians. A Federal Accounting Board would keep the power to cook the books out of their hands as well. Like the Fed, it would be run by a board of seven members, all professional accountants of long experience, serving 14-year terms. They could be removed only for cause. One member would be appointed chairman, serving a four-year term. The board would take over the duties of the Congressional Budget Office, and the White House Office of Management and Budget would be reduced to formulating the annual budget. The board would estimate future revenue and the costs of all legislation. It would also set the rules for how the federal books must be kept (no calling borrowed money “income”), and would determine if they are accurate and complete, as a CPA does for corporate books.

    One justification for the Federal Reserve is to keep the power to print money out of the hands of politicians. A Federal Accounting Board would keep the power to cook the books out of their hands as well. Like the Fed, it would be run by a board of seven members, all professional accountants of long experience, serving 14-year terms. They could be removed only for cause. One member would be appointed chairman, serving a four-year term.

    The board would take over the duties of the Congressional Budget Office, and the White House Office of Management and Budget would be reduced to formulating the annual budget. The board would estimate future revenue and the costs of all legislation. It would also set the rules for how the federal books must be kept (no calling borrowed money “income”), and would determine if they are accurate and complete, as a CPA does for corporate books. Read More