The Road to Freedom Page 19

  3Friedman, Benjamin M. (Fall 2005). “The Moral Case for Growth” The International Economy, pp. 40–45. http://www.economics.harvard.edu/faculty/friedman/files/The%20Moral%20Case%20for%20Growth.pdf

  4Bureau of Economic Analysis National Economic Accounts, http://www.bea.gov/national/.

  5Author’s calculation using Congressional Budget Office 2001 Long-Term Budget Outlook Alternative Fiscal Scenario, http://www.cbo.gov/doc.cfm?index=12212

  6A common rule of thumb in finance, 72 divided by a growth rate gives the approximate number of periods before an investment doubles. In this case, 72 divided by 1 is 72.

  7The 2005 President’s Advisory Panel on Federal Tax Reform shows that a complete shift to consumption taxation “could increase national income by up to 2.3 percent over the [10 year] budget window, by up to 4.5 percent over 20 years, and by up to six percent over the long run.” See the President’s Advisory Panel on Federal Tax Reform, “Simple, Fair, and Pro-Growth: Proposals to Fix America’s Tax System,” November 2005, 149, 190, http://www.taxpolicycenter.org/taxtopics/upload/tax-panel-2.pdf

  8Peter J. Wallison, “Dodd-Frank’s Threat to Financial Stability,” Wall Street Journal, March 25, 2011, http://online.wsj.com/article/SB10001424052748703858404576214193957527406.html

  9William Easterly and Sergio Reblo, “Fiscal Policy and Economic Growth: An Empirical Investigation,” NBER Working Paper #4499, October 1993; A. Bergh and M. Henrekson, “Government Size and Growth: A Survey and Interpretation of Evidence,” Journal of Economic Surveys, June 2011, doi: 10.1111/j.1467-6419.2011.00697.x. The two economists reviewed the considerable research on government spending and economic growth, and found that there was a near-consensus in the literature that higher government spending correlates with slower growth.

  10Gary Becker, Steven J.Davis, and Kevin Murphy, “Uncertainty and the Slow Recovery,” Wall Street Journal, January 4, 2010. http://online.wsj.com/arti-cle/SB10001424052748703278604574624711732528426.html

  11Scott R. Baker, Nicholas Bloom, and Steven Davis, “Measuring Economic Policy Uncertainty,” September 12, 2011, http://www.stanford.edu/~nbloom/PolicyUncertainty.pdf. The researchers use an empirical model that looks at Google-media data, the number of expiring tax measures, and the level of disagreement among forecasters over future federal government spending and future CPI levels to measure policy uncertainty and calculate its impact on jobs and growth.

  12See Madeline Zavodny, “Immigration and American Jobs,” 2011. http://www.aei.org/paper/society-and-culture/immigration/immigration-and-american-jobs/

  13Bureau of Labor Statistics Employment Situation Summary, http://www.bls.gov/news.release/empsit.nr0.htm

  14Ibid.

  15Ibid.

  16Ibid.

  17Ibid.

  18“More Signs That a Generation of Young Americans (18-29) Have Been Left Adrift by Joblessness as Anemic Jobs Numbers Are Released.” Generation Opportunity, August 5, 2011. http://generationopportunity.org/press/more-signs-that-a-generation-of-young-americans-18-29-have-been-left-adrift-by-joblessness-as-anemic-jobs-numbers-are-released-generation-opportunity-statement/

  19See Christina Romer and Jared Bernstein, “The Job Impact of the American Recovery and Reinvestment Plan,” January 9, 2009, http://www.politico.com/pdf/PPM116_obamadoc.pdf

  20Peter Wallison, “Repeal the Democrat’s Complex and Expensive Legislation,” theatlantic.com, July 19, 2011, http://www.theatlantic.com/business/archive/2011/07/repeal-the-democrats-complex-and-expensive-legislation/242143/

  21See the following Congressional testimony by economist Douglas Holtz-Eakin: http://waysandmeans.house.gov/UploadedFiles/HoltzEakin_Testimony_1_5.pdf

  22Timothy Conley and Bill Dupor, “The American Recovery and Reinvestment Act: Public Sector Jobs Saved, Private Sector Jobs Forestalled,” May 17, 2011, http://web.econ.ohio-state.edu/dupor/arra10_may11.pdf

  23For a sample of the literature, see Y. Algan, P. Cahuc, and A. Zylberberg, “Public Employment and Labor Market Preferences,” Economic Policy (2002): 1–65; T. Conley and B. Dupor, “The American Recovery and Reinvestment Act: Public Sector Jobs Saved, Private Sector Jobs Forestalled,” May 2001, http://web.econ.ohio-state.edu/dupor/arra10_may11.pdf; J. Malley and T. Moutos, “Government Employment and Unemployment: With One Hand Giveth, The Other Taketh,” University of Glasgow Working Paper Series no. 9709, May 1998.

  24Department of Energy. September 4, 2009. Available at http://energy.gov/articles/vice-president-biden-announces-finalized-535-million-loan-guarantee-solyndra.

  25Barack Obama, “Use of Project Labor Agreements for Federal Construction Projects,” Executive Order, February 6, 2009; David G. Tuerck, Sarah Glassman, and Paul Bachman, “Project Labor Agreements on Federal Construction Projects: A Costly Solution in Search of a Problem,” The Beacon Hill Institute Policy Study, August 2009.

  26Joe Nocera, “How Democrats Hurt Jobs,” New York Times, August 22, 2011, http://www.nytimes.com/2011/08/23/opinion/nocera-how-democrats-hurt-job-creation.html

  27Christopher Hinton, “NLRB drops case against Boeing over S.C. facility,” MarketWatch, December 9, 2011, http://www.marketwatch.com/story/nlrb-drops-case-against-boeing-over-sc-facility-2011-12-09

  28Congressional Budget Office, The Budget and Economic Outlook: An Update, August 2011, 5, http://www.cbo.gov/ftpdocs/123xx/doc12316/Update_SummaryforWeb.pdf). See also The Budget and Economic Outlook: Fiscal Years 2011 through 2021, January 2011, 134, http://www.cbo.gov/ftpdocs/123xx/doc12316/Update_SummaryforWeb.pdf). See also The Budget and Economic Outlook: Fiscal Years 2011 through 2021, January 2011, 134, http://www.cbo.gov/ftpdocs/120xx/doc12039/01-26_FY2011Outlook.pdf

  29Carmen M. Reinhart and Kenneth S. Rogoff, “Growth in a Time of Debt,” NBER Working Paper, January 2010, http://www.nber.org/papers/w15639

  30Congressional Budget Office, The Budget and Economic Outlook: An Update.

  31Author’s calculation. The U.S. deficit for fiscal year 2011 is $1.3 trillion dollars and the current population of the United States is 312,815,221 according to the U.S. Census Bureau.

  32Dana Blanton, “Fox News poll: 79% Say U.S. Economy Could Collapse,” FoxNews.com, March 23, 2010, http://www.foxnews.com/politics/2010/03/23/fox-news-poll-say-economy-collapse/#ixzz1hHcXd2Cq

  33Congressional Budget Office, The Budget and Economic Outlook: An Update. This is based on fiscal year 2011.

  34Author’s calculation using Congressional Budget Office, Long-Term Budget Outlook, June 2011, Alternative Fiscal Scenario, http://www.cbo.gov/doc.cfm?index=12212

  35Ibid.

  36Andrew G. Biggs, Kevin A. Hassett, and Matthew Jensen, “A Guide for Deficit Reduction in the United States Based on Historical Consolidations That Worked,” AEI Economic Policy Working Paper, December 27, 2010, http://www.aei.org/paper/100179

  37Ibid.

  38Daniel Leigh, Pete Devries, Charles Freedman, Jaime Guajardo, and Andrea Pescatori, “Will It Hurt? Macroeconomic Effects of Fiscal Consolidation,” World Economic Outlook: Recovery, Risk, and Rebalancing (International Monetary Fund, 2010).

  39“The Moment of Truth: Report of the National Commission on Fiscal Responsibility and Reform,” December 2010, http://www.fiscalcommission.gov/sites/fiscalcommission.gov/files/documents/TheMomentofTruth12_1_2010.pdf.

  40J. Monke and R. Johnson, Actual Farm Bill Spending and Cost Estimates (Congressional Research Service, December 13, 2010).

  41Energy Information Administration, “Federal Financial Interventions and Subsidies in Energy Markets 2007,” April 2008, ftp://ftp.eia.doe.gov/service/srcneaf%282008%2901.pdf

  42“The Moment of Truth: Report of the National Commission on Fiscal Responsibility and Reform,” December 2010; Paul Ryan, “The Path to Prosperity,” April 2011; Fiscal Year 2012 Budget Resolution, http://budget.house.gov/UploadedFiles/PathToProsperityFY2012.pdf

  43“The Moment of Truth: Report of the National Commission on Fiscal Responsibility and Reform,” December 2010; Paul Ryan, “The Path to Prosperity,” April 2011.

&nbs
p; 44C. Eugene Steuerle and Stephanie Rennane, “Social Security and Medicare Taxes and Benefits Over a Lifetime,” Urban Institute, June 2011, http://www.urban.org/UploadedPDF/social-security-medicare-benefits-over-lifetime.pdf

  45Social Security and Medicare Boards of Trustees, “A summary of the 2011 Annual Reports,” http://www.socialsecurity.gov/oact/trsum/index.html.

  46Ibid.

  47Author’s calculation using Congressional Budget Office, 2001 Long-Term Budget Outlook Alternative Fiscal Scenario, http://www.cbo.gov/doc.cfm?index=12212

  48U.S. Social Security Administration Office of Retirement and Disability Policy, “Annual Statistical Supplement, 2010,” “Table 3.E2—Number and percentage of poor persons, by age, at end of selected years 1959–2008,” http://www.ssa.gov/policy/docs/statcomps/supplement/2010/3e.html#table3.e2

  49Update 2011, Social Security Administration, October 2010, http://ssa.gov/pubs/10003.pdf

  50The 2011 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds, Table V.A4, “Cohort Life Expectancy,” http://www.ssa.gov/OACT/TR/2011/lr5a4.html

  51Ibid.

  52Solvency provision, Social Security Administration, http://www.ssa.gov/OACT/solvency/provisions/charts/chart_run466.html

  53Author’s calculations based on Social Security Administration’s solvency provision proposals: http://www.ssa.gov/OACT/solvency/provisions/charts/chart_run375.html; http://www.ssa.gov/OACT/solvency/provisions/charts/chart_run211.html; http://www.ssa.gov/OACT/solvency/provisions/charts/chart_run383.html

  54See Joseph Antos, Andrew Biggs, Alex Brill, and Alan D. Viard, “Fiscal Solutions: A Balanced Plan for Fiscal Stability and Economic Growth,” Peter G. Peterson Foundation Solutions Initiative, May 25, 2011, http://pgpf.org/Issues/Fiscal-Outlook/2011/01/20/~/media/6A83826740A94DBE91CCA557ECA1D36F

  55U.S. Social Security Administration Office of Retirement and Disability Policy “Annual Statistical Supplement, 2010,” “Table 3.E2—Number and percentage of poor persons, by age, at end of selected years 1959–2008,” http://www.ssa.gov/policy/docs/statcomps/supplement/2010/3e.html#table3.e2

  56Author’s calculations based on Paul Van de Water and Arloc Sherman, “Social Security Keeps 20 Million Americnas Out of Poverty: A State-by-State Analysis,” Center on Budget and Policy Priorities, August 11, 2010, http://www.cbpp.org/files/8-11-10socsec.pdf

  57“2011 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds,” http://www.cms.gov/ReportsTrustFunds/downloads/tr2011.pdf

  58Kaiser Family Foundation Statehealthfacts.org, “United States: Federal and State Share of Medicaid Spending, FY2009,” http://statehealthfacts.org/comparemaptable.jsp?ind=177&cat=4&sub=47&yr=90&typ=4&sort=a&rgnhl=4

  59“Medicaid Enrollment as a Percent of Total Population,” The Public Policy Institute of New York State, Inc., http://www.ppinys.org/reports/2010/innovation/MedicaidEnrollment.html; “Federal and State Share of Medicaid Spending,” The Henry J. Kaiser Family Foundation, http://statehealthfacts.org/comparetable.jsp?ind=636&cat=4&sub=47&yr=90&typ=4; United States Department of Agriculture Economic Research Service, “State Fact Sheets: New York,” updated September 14, 2011, http://www.ers.usda.gov/Statefacts/NY.HTM

  60“2011 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds,” http://www.cms.gov/ReportsTrustFunds/downloads/tr2011.pdf

  61Congressional Budget Office, “CBO’s 2011 Long Term Budget Outlook,” June 2011, http://www.cbo.gov/doc.cfm?index=12212

  62Thomas P. Miller and James Capretta, “Beyond Repeal and Replace: The Defined Contribution Route to Health Care Choice and Competition,” AEI Press, 2010, http://www.aei.org/docLib/Defined-Contribution-Route-to-Health-Care-Choice.pdf

  63Matt Moon, “How Do Americans Feel About Taxes Today?” Tax Foundation Special Report No. 166, April 2009, http://www.taxfoundation.org/files/sr166.pdf.

  64Urban-Brookings Tax Policy Center, Table 11-0173, “Tax Units with Zero or Negative Tax Liability, 2004–2011,” http://www.taxpolicycenter.org/numbers/Content/PDF/T11-0173.pdf

  65Scott A. Hodge, “Accounting for What Families Pay in Taxes and What They Receive in Government Spending,” Tax Foundation Fiscal Fact No. 189, September 21, 2009, http://www.taxfoundation.org/publications/show/25195.html

  66National Taxpayer Advocate Annual Report to Congress, December 31, 2010, http://www.taxpayeradvocate.irs.gov/files/ExecSummary_2010ARC.pdf

  67Ibid.

  68OECD Tax Database, www.oecd.org/ctp/taxdatabase. Even more important, the U.S. average marginal tax rate is also well above the mean for the countries in the Organisation for Economic Co-operation and Development (OECD). Aparna Mathur, “Race to the Top of the Laffer Curve,” American.com, February 16, 2011, http://www.american.com/archive/2011/february/race-to-the-top-of-the-laffer-curve

  69Arthur Laffer, “The Laffer Curve: Past, Present, and Future,” Heritage Foundation Backgrounder #1765, June 1, 2004, http://www.heritage.org/Research/Reports/2004/06/The-Laffer-Curve-Past-Present-and-Future

  70Kevin Hassett, “Laffer Curve Pays Billions If Obama Just Asks,” Bloomberg.com, February 13, 2011, http://www.businessweek.com/news/2011-02-13/laffer-curve-pays-billions-if-obama-just-asks-kevin-hassett.html; Alex Brill and Kevin A. Hassett, “Revenue-Maximizing Corporate Income Taxes: The Laffer Curve in OECD Countries,” AEI Working Paper #137, July 31, 2007.

  71Matthew H. Jensen and Aparna Mathur, “Corporate Tax Burden on Labor: Theory and Empirical Evidence,” Tax Notes, June 6, 2011, http://www.aei.org/docLib/Tax-Notes-Mathur-Jensen-June-2011.pdf

  72Most economists believe that we are not on the wrong side of the Laffer curve for personal income taxes. However, we are taxing citizens at a level that compromises savings and thus economic growth.

  73Dylan Matthews, “Where does the Laffer curve bend?” Washingtonpost.com, August 9, 2010, http://voices.washingtonpost.com/ezra-klein/2010/08/where_does_the_laffer_curve_be.html

  74This refers to Title 26 of the US Code of Federal Regulations and Title 26 of the United States Code. See http://bookstore.gpo.gov/baskets/cfr-listing.jsp.

  75Small Business Taxes & Management Special Report, “Expiring Tax Provisions 2009–2020,” http://www.smbiz.com/sbspec324.html

  76Joint Committee on Taxation, “Estimates of Federal Tax Expenditures for Fiscal Years 2010–2014,” JCS-3-10, December 15, 2010, http://www.jct.gov/publications.html?func=startdown&id=3718.

  77Ibid.

  78See President’s Advisory Panel on Federal Tax Reform, Simple, Fair, and Pro-Growth: Proposals to Fix America’s Tax System (Government Printing Office, 2005), 183. The Progressive Consumption Tax plan did not receive the consensus support from panel members required for it to be officially recommended by the panel. Bracket endpoints are in 2006 dollars; 2012 values would be roughly 15 percent higher. One of the most compelling consumption tax options today is what economists call the Bradford “X tax,” named for Princeton economist David Bradford, which is a flat tax on businesss income, plus a mildly progressive tax on private wages. For a more detailed description of the X Tax, see Robert Carroll, Scott Ganz, and Alan D. Viard, “The X Tax: The Progressive Consumption Tax America Needs?” AEI Tax Policy Outlook, December 2008; and Joseph Antos, Andrew Biggs, Alex Brill and Alan D. Viard, “Fiscal Solutions: A Balanced Plan for Fiscal Stability and Economic Growth,” Peterson Foundation Solutions Initiative, May 25, 2011.

  INDEX

  ABC News, 96

  Aetna, 129

  Africa, poverty in, 73–74

  agricultural subsidies, 118, 156–157

  Akerlof, George, 127

  Americans

  charity and, 81–82

  happiness of, 35

  meritocratic fairness and, 52–53

  opportunity society and, 53–56

  work ethic of, 33–34

  Amgen, 120

  Aristotle,
52

  asymmetric information, 126–128, 129

  AT&T, 119, 120

  bailouts, 18, 38–40, 63, 64

  Banfield, Edward, 135

  banks, 31, 38, 39

  Barnum, P.T., 106

  benefits

  government employee, 19–20, 31

  Social Security, 160–161

  welfare, 16, 99

  Bergh, Andreas, 108

  big government

  causes of, 7

  choice of, 173–175

  dissatisfaction with, 96

  economic growth and, 108–110

  expansion, 94–95, 97–100

  unemployment and, 150

  Boeing, 151

  Bono, 56

  Bouazizi, Mohamed, 12–13

  Bowling Alone (Putnam), 136

  Burke, Edmund, 137

  Burkhauser, Richard, 61

  Bush, George W., 103

  Camus, Albert, 31–32

  capitalism

  criticisms of, 45, 68, 76, 78

  democratic, 72

  role in reducing poverty, 73–74, 76, 79, 88

  See also free enterprise

  Carter, Jimmy, 14

  Cash for Clunkers program, 18

  CBS News, 7

  charity

  in America, 81–83

  big government and, 87–88, 135–137

  positive results of, 85–87

  See also generosity

  China, free enterprise in, 73

  Chrysler, 39, 63

  Clark, Gregory, 70

  CNN, 140

  Coase Theorem, 123–124

  Coase, Ronald, 123

  collectivist views, 82–84, 174. See also social democracies

  communism, 14, 73, 80

  Congressional Budget Office, 5, 39, 61, 107

  Consumer Protection Act, 130–131, 144–146, 149

  consumption tax. See taxation

  consumption, equality of, 78–79