(A) Fiscal Policy

By Phil Gramm and John Early – 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

By Phil Gramm and John Early – Real government transfer payments to the bottom 20% of household earners surged by 269% between 1967 and 2017, while middle-income households saw their real earnings after taxes rise by only 154% during the same period. That has largely equalized the income of the bottom 60% of Americans. This government-created equality has caused the labor-force participation rate to collapse among working-age people in low-income households and unleashed a populist realignment that is unraveling the coalition that has dominated American politics since the 1930s. Read More

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