Profligate Joe Biden

Big spender Joe Biden is proposing another big spending spree, this time the $1.8 trillion American Families Plan. 

1. >$200 billion in spending on childcare,

2. ~$200 billion to make pre-kindergarten universally available for free,

3. >$200 billion towards government-subsidized paid family and medical leave,

4. ~$300 billion towards making community college free for all Americans, and

5. ~$200 billion on health insurance subsidies available through the Affordable Care Act healthcare exchanges.  Source: Wikipedia

That's $1.1 trillion. MarketWatch says there is $80 billion for enhanced IRS enforcement.  It's not clear what the other $0.6 trillion is. NPR says the amount for IRS enforcement is $700 billion. However, most of that seems to be higher tax revenues rather than spending.

Forbes has an article about the American Families Plan, too. It refers to the Washington Compost's touting  the bill's proposal "to give all workers up to 12 weeks of paid leave" for medical reasons or child care. All? Since when do the self-employed have an employer -- company or another person -- the government can subsidize in order to pay for such paid leave?

Biden proposes tax increases on "the rich" to pay for a little of it. You can bet that many "non-rich" will pay for it indirectly via inflation and smaller wage increases.

Adding the spending numbers for Profligate Joe, the result is $5.7 trillion. 

American Rescue Plan           $1.9 trillion 

American Jobs Plan               $2.0 trillion

American Families Plan         $1.8 trillion 

Truth versus image-making

Holman W. Jenkins, Jr. has a very good article titled How to Have More Police Shootings in the April 24 Wall Street Journal. Double negatives make the subtitle confusing. The main pairings to choose from seem to be:

1. More people resisting arrest with more police misconduct.

2. Fewer people resisting arrest with less police misconduct.

Only 20-25% of the article concerns police conduct and resisting arrest. Most of the rest is about choosing between the truth and promoting one's self image. Promoting one's self-image has much more priority nowadays, especially for newspapers, journalists, politicians and some business people. "Virtue signaling" is another, newer term for promoting one's self-image.

Seeing the whole article online requires a paid subscription (which could be somebody else's), so the following are excerpts from the article.

"[T]he cavalcade of CEOs who denounced Georgia’s election law didn’t know in the slightest what they were talking about. ... Instead a bunch of business leaders simply adopted Democratic talking points not knowing what the law contained. And, more importantly, not caring." 

"If you think The New York Times and Washington Post mind in the least that their coverage is off-putting to a large number of Americans, you misunderstand the business they’re in. Once upon a time, broad reach really was our industry’s goal, to meet the desire of our advertisers for as many customers as possible. In turn, this drove our need to cover the news in a way that we could defend to all comers as “objective” and straight down the middle."

That's no longer the case. The New York Times, Washington Post, and many other media outlets now prioritize promoting and protecting their self-images over truth.

Joe Biden and Maxine Waters make prejudicial comments about a pending jury verdict to promote their self-image. Finally, of course, many people express opinions about politics and much more that prioritize "virtue signaling" over truth.

China's government's view of cryptocurrency

https://www.cnbc.com/2021/04/19/china-calls-bitcoin-an-investment-alternative-marking-shift-in-tone.html

China's government did more or less what Turkey's did. It regards Bitcoin and other cryptocurrencies as "investment alternatives" but not "currencies per se." In other words, one can be a "store of value" but not a "medium of exchange." The usual meaning of money is something that has both properties.

Wikipedia: "The main functions of money are distinguished as: a medium of exchange, a unit of account, a store of value and sometimes, a standard of deferred payment. Any item or verifiable record that fulfils these functions can be considered as money."

China's government wants its yuan to have a monopoly on money.

Turkey bans crypto payments

Turkey Bans Crypto Payments

Note that Turkey's government did not ban cryptocurrencies entirely. Turks can still own and buy a cryptocurrency as an investment or inflation hedge. But Turkey's government wants to keep a monopoly for its lira as the means of payment (or means of exchange). "Readers should note that Turkey’s latest ban does not stop Turkish citizens from trading cryptocurrencies. They can still buy bitcoin as a hedge against inflation."

"Citizens of countries facing high inflation and fiat currency crises, such as Turkey, have turned to bitcoin in the past few years, raising hopes of widespread adoption across the globe. Turkey’s inflation topped 16% last week, and its currency, the lira, has depreciated by 10% this year, having dropped by 24% in 2020.

Crypto Fearmongers Get Pushback From Former CIA Director

 Janet Yellen, Bitcoin And Crypto Fearmongers Get Pushback From Former CIA Director

I have heard of drug dealers with suitcases full of greenbacks. I haven't heard of drug dealers transacting on the streets with a cryptocurrency. 😊

Earlier on this blog: Janet Yellen on cryptocurrency

John Dewey on rights and government

Jonah Goldberg's article The Newest Deal in The Dispatch includes the following about John Dewey, a leader in the "progressive" Progressive movement during its formative years:

Philosophically, the New Deal drew on—or at least reflected—Dewey’s and Woodrow Wilson’s contempt for the outdated vision of the Founders. The Founders “lacked,” Dewey wrote in Liberalism and Social Action, “historic sense and interest.” The Burkean and Madisonian vision of government simply serving to protect liberties and enforce fair, neutral rules was inadequate next to what could be accomplished with a sufficient application of will by experts given the power to provide meaning to every individual.

This is what the lid-less, unconstrained universe had to offer planners. Indeed, even the idea of individual rights was a bygone relic. “Natural rights and natural liberties exist only in the kingdom of mythological social zoology,” Dewey explained. Rights can only be properly secured through “social control of economic forces in the interest of the great mass of individuals.” For Dewey, humans were “nothing in themselves”; the General Will was everything.

I have read very little by John Dewey. I don’t have a copy of Liberalism and Social Action, so I looked on Amazon to see if I could find these quotes in Liberalism and Social Action. Unfortunately Amazon does not have a "look inside" feature for the book.

Anyway, if Goldberg’s claims are legitimate enough, these quotes are enough for me to strongly disagree with Dewey’s political philosophy. The bedrock views of today's Progressives surely agree with Dewey's. The so-called General Will, even if it expresses the wants of a majority of the people subject to the government’s rules, can realistically only be wielded by politicians backed by government force.

NY Times spreads ITEP falsehoods and propaganda

David Leonhardt of The New York Times says: Corporate Taxes Are Wealth Taxes. He adds: "And their decline has led to a steep drop in tax rates for the affluent."

I will say little about these two claims. Since the "corporate tax" is based on income, not strictly wealth (or assets), Leonhardt's word usage is very sloppy. Wealth and high income are much correlated. Thus a tax on wealth and a tax on income tax the same people (or businesses), but that is no excuse for such sloppiness. Secondly, corporate income taxes paid in part have fallen due to the base rate being cut from 35% to 21% effective 2018. Also, there are all the new tax subsidies created by legislation passed in response to the pandemic.  

My focus instead will be on Leonhardt's saying: "[A]t least 55 big companies paid zero federal income taxes last year, according to the Institute on Taxation and Economic Policy. Among them: Archer-Daniels-Midland, Booz Allen Hamilton, FedEx, HP, Interpublic, Nike and Xcel Energy."

Leonhardt thus relied on the deeply flawed reporting of the Institute on Taxation and Economic Policy (ITEP). ITEP consistently (a) treats GAAP accounting numbers as if they are cash taxes paid, and (b) ignores the cash paid for income taxes explicitly stated in corporate 10-Ks. I have written about these several times in the past:

ITEP and income taxes for 3 banks                        In the wake of ITEP’s report

ITEP and three tax topics                                       ITEP makes a myth    

Amazon income taxes addenda                             Amazon 2019, ITEP and its wake    

Netflix income taxes 2018

I also looked at the 10-Ks of three of the companies named above in Leonhardt's article to show ITEP's falsehoods and propagandizing.   

Archer Daniels Midland

ITEP: "Food conglomerate Archer Daniels Midland enjoyed $438 million of U.S. pretax income last year and received a federal tax rebate of $164 million."

ITEP ignored ADM's 10-K (p. 61) that explicitly says cash payments for corporate income taxes were $195 million.  

Also, the $164 million is not a cash rebate. It is the (negative) GAAP expense provision based on GAAP pre-tax income for 2020. ITEP also ignored the $41 million deferred part of ADM's GAAP provision for income tax for 2020. It compensates for accelerated tax deductions taken in prior years to be reversed with paying higher taxes thereafter, part of it in 2020.  

FedEx

ITEP: "The delivery giant FedEx zeroed out its federal income tax on $1.2 billion of U.S. pretax income in 2020 and received a rebate of $230 million."

ITEP ignored FedEx's 10-K (p. 144) that explicitly says cash payments for corporate income taxes were $389 million.

Also, the $230 million is not a cash rebate. It is the (negative) GAAP expense provision based on GAAP pre-tax income for 2020. ITEP also ignored the $475 million deferred part of GAAP provision for income tax for 2020. It compensates for accelerated tax deductions taken in prior years to be reversed with paying higher taxes thereafter, part of it in 2020.

Nike

ITEP: "The shoe manufacturer Nike didn’t pay a dime of federal income tax on almost $2.9 billion of U.S. pretax income last year, instead enjoying a $109 million tax rebate."

ITEP ignored Nike's 10-K (p. 59) that explicitly says cash payments for corporate income taxes were $1,028 million.

Also, the $109 million is not a cash rebate. It is the (negative) GAAP expense provision based on GAAP pre-tax income for 2020. ITEP also ignored the deferred part of GAAP provision for income tax for 2020. It compensates for accelerated tax deductions taken in prior years to be reversed with paying higher taxes thereafter, part of it in 2020.

Federal spending spree

In 2008 Rahm Emanuel, former Chief of Staff to President Barack Obama and mayor of Chicago, said: "You never want a serious crisis to go to waste. And what I mean by that [is] it's an opportunity to do things that you think you could not before."

It has become a common catchphrase. Emanuel repeated it last year amid the coronavirus pandemic (link). Spendthrifts Joe Biden and the "progressives" and leftist radicals of the Democratic party have strongly embraced it 

FEE: Federal ‘COVID’ Spending Just Hit $41,870 Per Taxpayer Signed by Biden last month, the 
American Rescue Plan Act of 2021 called for spending $1.9 trillion on the Covid19 crisis, with a large part of the $1.9 trillion not directly related to Covid19. It includes, among other things, spending on

• agriculture and nutrition programs;
• schools and institutions of higher education;
• child care and programs for older Americans and their families;
• mental health and substance-use disorder services;
• emergency rental assistance, homeowner assistance, and other housing programs;
• payments to state, local, tribal, and territorial governments for economic relief. (Link)

The $6 trillion stated in the FEE article includes the $4.1 in relief measures passed while Donald Trump was President (link).

Still far from satisfied, Biden and his cronies propose another spending spree called the American Jobs Plan. It proposes spending another $2 trillion on infrastructure and jobs (link). Of course, it includes lots of "pork", such as subsidies for buying all-electric vehicles and charging stations for them. In other words, it is a down-payment -- merely a down-payment -- on the so-called Green New Deal.

The $2 trillion would increase total spending to about 8/6*$41,780 = $55,707 per taxpayer.

As usual, the the promoters of such legislation hype how many jobs it will create while ignoring how many jobs it will destroy.

This proposed legislation also includes tax increases to pay for some of it. The corporate tax rate would rise from 21% to 28%, half way toward the 35% pre-2018 tax rate. It would mostly raise personal income tax rates for people with incomes exceeding $200,000 for single filers and $400,000 for married filing jointly. However, it will very likely hit a lot of people with incomes lower than those.

Of course, all this spending (over 10 years) will increase the federal debt and sow seeds of inflation. Much of the debt will likely be funded by the accommodating Federal Reserve.

Medicare Advantage analysis

It's time for a balanced conversation about Medicare Advantage spending

When a person becomes eligible for Medicare, he or she has two main choices. 

1. Original or traditional Medicare with or without supplemental coverage via a prescription drug policy, Medicaid, purchasing a Medicare supplement policy (sometimes called Medigap), or from an employer. The model is fee-for-service.  Medicare pays providers for claims for medical services.

2. Medicare Advantage. The insured person chooses one insurer (not Medicare) among many and various plans the insurer offers.  One policy from a private insurer, which pays providers. The Centers for Medicare & Medicaid Services pays each private insurer on a per capita basis, the rates varying geographically. The model is managed care or HMO or PPO. 

In either case, he or she pays the Medicare Part B premium. 

The author of this article favors Medicare Advantage over original Medicare with or without supplemental coverage. She believes it is more cost effective. I don't have the expertise to opine on the thoroughness of her case, but it seems she presents a good and unbiased case for favoring Medicare Advantage.

P.S. Sellers of Medicare Advantage policies often advertise "$0 premium." While this is true regarding the amount of premium the insured person pays to the insurer, it is at least misleading since the insured person must pay the Medicare Part B premium. Rarely does "$0 premium" advertising include this caveat, or it is in fine print (which on tv can appear too briefly to read).

Bitcoin and freedom

Today I indulge in a little self-congratulations. Today is the 5th anniversary of this blog.

My posting the following articles is not an April Fools joke.

Bitcoin unleashes the sovereign individual

How Bitcoin Provides Freedom