In Washington, the clarion call to resolve America’s fiscal deterioration has been to raise taxes on everyone. Even if politicians claim they do not want to confiscate wealth from low- and middle-income households, they still do so every time the Treasury Department borrows and the Federal Reserve prints, known as the odious inflation tax. But as lawmakers become aware of Uncle Sam’s financial situation spiraling out of control, there is a renewed focus on taxes (new and old).
Joe Biden Talks Taxes
President Joe Biden’s social media communications team posted a legislative proposal on X, recommending a new minimum levy on the country’s wealthiest citizens. “A billionaire minimum tax of just 25% would raise $440 billion over the next 10 years,” the X post stated. “Imagine what we could do if we just made billionaires pay their taxes like everyone else.”
Insert the meme of the woman spitting out her coffee as she laughs!
Let’s say this scheme would generate as much revenue as the president claims. The tax would be just a drop in the bucket since the White House forecasts that the federal government will post cumulative deficits of more than $17 trillion in this span. The billionaire minimum penalty would cover fewer than 3% of these budget shortfalls over the next decade.
Politicians on both sides of the aisle must realize by now that they can raise taxes until their hearts are content. The challenge is that it will not matter until Washington stops spending more than it takes in. Last year, the federal government enjoyed $4.5 trillion in receipts, the second highest on record. And yet, the nation’s capital still recorded a $1.7 trillion budget gap, one of the largest in US history.
Plus, is he claiming that billionaires are not paying their taxes? Send the tax man!
Ro Khanna Blames Republicans
Rep. Ro Khanna (D-CA) took to X to blame Republicans for the national debt. He claimed that America’s $33.8 trillion pile of red ink was caused by tax cuts employed by former Presidents Ronald Reagan, George W. Bush, and Donald Trump. Of course, to give credit where credit is due, as Rep. Khanna also correctly pointed out that Bush’s foreign wars contributed to the debt.
Like President Biden, he failed to look at the data. Following all three presidents’ tax cuts, the government received even more money to blow on military conflicts and statist largesse. This is known as the Laffer Curve, a model highlighting the relationship between tax rates and revenues. The federal government is responsible for reining in spending, not taking more from families and companies.
As eminent economist Milton Friedman said, “I am in favor of cutting taxes under any circumstances and for any excuse, for any reason, whenever it’s possible.” At the same time, Friedman believed that starving the beast would force policymakers to reduce the size of government. Unfortunately, because the Federal Reserve is a political institution that enables the drunken sailors in both chambers of Congress, this has not happened.
Promoting Collusion
Do you ever want to understand the economic insights of statists? In one area of the marketplace, this is how it works. If prices go down, businesses are colluding. If prices go up, companies are price gouging. If prices are stagnant, the marketplace does not have enough competition. It is a no-win situation for Corporate America at times since the Federal Trade Commission (FTC) would clutch its pearls in any of these scenarios. For political reasons, Bidenomics is about looking the other way in one of these areas.
Once again, Biden’s social media communications team took to X to call on corporations to slash prices. “Let me be clear to any corporation that hasn’t brought their prices back down even as inflation has come down: It’s time to stop the price gouging. Give American consumers a break.”
(Photo by Nic Antaya for The Boston Globe via Getty Images)
There is a lot to unpack here. First, inflation is not down as the consumer price index (CPI) is still climbing. Instead, the growth rate has slowed from the 9.1% peak in June 2022. The CPI is around 3%, and the core CPI, which excludes volatile food and energy components, is about 4%. This means overall prices are rising between 3% and 4% on top of the cumulative inflation of 17% since 2021.
Second, the idea behind greedflation has already been debunked and used as a scapegoat for the incompetence in Washington. Higher prices result from many things, from expanding the money supply to deficit-financed spending to wars. Eggs are an excellent example of this. Last year, egg prices skyrocketed and then cratered. In 2015, they soared and then plummeted and then surged again. Did supermarkets and farmers pick and choose when to be greedy?
Lastly, is the president encouraging collusion? The FTC has often complained about price fixing, arguing that it violates antitrust laws. “Price fixing is an agreement (written, verbal, or inferred from conduct) among competitors to raise, lower, maintain, or stabilize prices or price levels,” the FTC writes, adding that this can result in lengthy imprisonment, massive fines, and civil enforcement action. Despite howling at the moon that nobody is above the law, Biden appears willing to allow companies to be above the law if they heed his calls to action.
