Archive for the ‘#kamalaharris’ Tag

Voter Bribery Writ Large   7 comments

I’m continuing my rundown of the massive Democratic primary field, starting with the lowest ratings and working my way upward. And, my have the mighty fallen, as today I look at Bernie Sanders. You can check out my previous articles by following the links below. And, you’re always welcome to comment.

We are finally moving into the main competition for the Democratic nomination. I’m not saying that none of the ones I’ve already analyzed could win the nomination, but that it is highly likely they won’t. The Democrats much more tightly control their nomination process than do the Republicans.

Medical Insurance

A gaffe is when a politician tells some obvious truth he wasn’t supposed to say. Sen. Kamala Harris (D-CA) committed a gaffe in February when she admitted that Sen. Bernie Sanders’s (I-VT) “Medicare for All” proposal would oust close to 200 million Americans from their existing health insurance arrangements, a prospect that causes public support for “Medicare for All” to plummet from 56 percent to 37 percent. Harris thus helpfully illustrated why Sanders’s proposal is so pie-in-the-sky bonkers that it would never pass Congress.

But, don’t worry, Kamala Harris has an incremental approach that will accomplish the same thing – kind of like that frog boiling in the slowly warming pot of water. By insisting she is merely seeking a level playing field where the public option may compete with private insurance, Harris is fooling us into believing that there’s ever a level playing field between government and private industry. All the power rests with the government because it has a monopoly on force and can ignore economic realities and just tax everybody to pay for what it wants.

And remember, medical insurance is not health care. It’s not even guaranteed access to health care. I qualify for “free” medical care through BIA services, but long wait times and poor quality have convinced me that government-sponsored medical care sucks. I’d rather pay for real doctors from my own pocketbook.

Economy

Harris wants to create a federal subsidy for rent payments which would enrich landlords in the same way that tuition subsidies have enriched colleges and health subsidies have enriched insurers and providers, both at the expense of actual consumers..

Here’s some of what Professor Tyler Cowen wrote for Bloomberg about the proposal:

One of the worst tendencies in American politics is to restrict supply and subsidize demand. …The likely result of such policies is high and rising prices, restricted access and often poor quality. If you limit the number of homes and apartments, for example, but give buyers subsidies, that is a formula for exorbitant prices. That is what makes early accounts of Senator Kamala Harris’s economic plans so disappointing. …Consider Harris’s embrace of subsidies for renters, as reflected by her recent sponsorship of the Rent Relief Act of 2018. Given the high price of housing in many parts of the U.S., it is easy to see why the idea might have appeal. But the best and most sustainable way of producing cheaper housing is to build more homes and apartments. The resulting increase in supply will cause prices to fall… That is basic supply and demand, with supply doing the active work. The Harris bill, in contrast, calls for tax credits to renters. …There is an obvious problem with this approach. If you subsidize renters, that will push up the price of apartments. Furthermore, economic logic suggests that big rent increases are most likely in those cases where the supply of apartments is relatively fixed, a basic principle of what is called “tax incidence theory.” In sum, most of the gains from this policy would go to landlords, not renters.

In other words, this is a perfect plan for a politician who understands “public choice” theory. The people think they’re getting a freebie, but the benefits actually go to those with political influence and power.

Then Harris proposes a $2.7 trillion tax cut. What? I believe people should be able to keep any money they earn, so my instinct was to cheer, except whenever a politician offers something that sounds too good to be true, it almost always is.

Now let’s look at her $2.7 trillion tax cut. I believe that people should be allowed to keep the lion’s share of any money they earn, so my gut instinct is to cheer.

Kyle Pomerlau of the Tax Foundation has done the heavy lifting and looked closely at the details. He has a thorough explanation of her plan and its likely impact:

The “LIFT the Middle-Class Act” (LIFT) would create a new refundable tax credit available to low- and middle-income taxpayers. …LIFT would provide a refundable credit that would match a maximum of $3,000 in earned income ($6,000 for married couples filing jointly). …The credit would begin to phase out for single taxpayers starting at $30,000 of adjusted gross income (AGI) and $80,000 for single taxpayers with children, and begin phasing out for married taxpayers at $60,000 of AGI. The phaseout rate for all taxpayers would be 15 percent. …LIFT’s impact on the economy is primarily through its effect on the labor force. LIFT phases in from the first dollar of earned income to the maximum credit of $3,000 per tax filer. It then phases out starting at different levels of income, depending on a tax filer’s marital status and whether they have children. These phase-ins and phaseouts create implicit marginal subsidies and tax rates that impact individuals’ incentive to work.

Put simply, Harris is proposing a new version of the earned income credit, which subsidizes some taxpayers for working while penalizing other taxpayers for the same behavior.

For taxpayers in the credit phaseout range, tax liability would increase by 15 cents for each additional dollar earned. This means that these taxpayers would face an additional implicit marginal tax rate of 15 percent, which would reduce these taxpayers’ incentive to work additional hours. In contrast, taxpayers in the phase-in range of the credit would get $1 for each additional $1 of income they earn. As such, these taxpayers would benefit from an effective marginal subsidy rate, or negative marginal tax rate, of 100 percent. A negative tax rate of 100 percent would increase the incentive for these taxpayers to work additional hours.

Kyle crunches the numbers to determine the overall economic impact:

While the positive labor force effects of the phase-in of the credit could offset the negative effect of the phaseout, we find that, on net, the size of the total labor force would shrink under this policy. This is primarily due to the large number of taxpayers that would fall in the phaseout range of the credit relative to the number of individuals that would benefit from the phase-in. …We estimate that the credit…would reduce economic output by 0.7 percent and result in about 825,906 fewer full-time equivalent jobs.

Wow! It would seem impossible to design a $2.7 trillion tax cut that actually hurts the economy, but Senator Harris has succeeded in that dubious achievement and has figured out how to create an anti-supply-side tax cut. It’s gets worse, though. The tax cut is

refundable,” so the money goes to people who don’t pay taxes. It is government spending being laundered through the tax code. Harris claims to be cutting taxes, but part of what she’s doing is expanding redistribution and making government bigger, which will encourage more fraud). She also has been pretty cagey about how she plans to pay for her proposal.

Considering the poor design and upside-down economics of the rent subsidy scheme and the new tax credit, the bottom line is obvious: Kamala Harris wants to buy votes, and she has decided that it is okay to hurt the economy in hopes of achieving her political ambitions.

Does that make her presidential material?

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