Americans spend $400 billion dollars per year to comply with the tax code. Americans also dedicate 9 billion hours of labor to comply with the current tax code. Beyond costly compliance, the current tax code distorts investment and work decisions in the economy. Something needs to be done to simplify the tax code and make it pro-growth.
When people refer to the national debt, they almost always mean the debt owed by our government. But there are actually two important types of debt in the American economy: government debt, and private debt owed by households and businesses.
House Speaker Paul Ryan recently proposed a tax plan called A Better Way: A Vision for a Confident America. Ryan’s plan to make the United States more competitive includes a tax cut for businesses, a switch to a territorial tax system, and a border-adjustment tax. A tax cut and a switch to a territorial system would be positive for the economy. On the other hand, the border-adjustment tax would work like a tariff. It would encourage inefficient domestic production, which would raise prices and reduce real output. Over the long run the BAT would not even reduce the trade deficit.
Many economists have argued that government mortgage programs and low interest rates policies caused the 2008 financial crisis. We maintain that government deposits insurance, provided in the United States by the Federal Deposit Insurance Corporation (or FDIC), may have also been a contributing factor. By failing to price risk fairly, the FDIC encourages banks to increase their risk-taking activities.
Bitcoin, the world’s first form of digital cash, is a nascent invention that has overturned centuries of commonly-held assumptions about monetary policy and the role of government in the provision of money. Whereas universities have long taught that money can only be provided by a government that guarantees it and demands its use in taxation, Bitcoin has thrived for eight years without any government backing it, tantalizingly offering a glimpse of a future separation between state and money, starving government of the fuel that powers its totalitarian impulses and warlike tendencies.
In my last article and blog on Bitcoin, I discussed some issues that Bitcoin faced from consolidation and the increasing professionalization of Bitcoin “mining.” These issues may soon be coming to a head in an argument about Bitcoin’s underlying code that offers two divergent paths for the future of Bitcoin – or a third way in which it splits into two separate assets. This possibility is both a serious concern for Bitcoin users and investors.
The ways of the regulatory state go like this: when a crisis erupts, don’t ask how earlier government interventions may have made the crisis possible or worse than it would have been. Rather, denounce private greed, declare good intentions, pile new regulations atop old, and hope for the best.
We ought to know by now that good intentions alone cannot make a government policy beneficial. Since the law of economics—market forces—are inexorable, we should not expect even good will to withstand them. “Nature to be commanded,” Francis Bacon said, “must be obeyed.” Similarly, if market forces are to serve society, they must be respected.
The Bipartisan Budget Act of 2015 suspended the debt ceiling through mid-March of this year. On March 16, the debt ceiling was raised to the current level. When the debt ceiling is reached, the Treasury will not be able to issue more debt to borrow new funds from the public. Instead, the Treasury must take extraordinary measures to raise cash. Extraordinary measures are policies that temporarily lower the national debt by reducing the Treasury securities held by government agencies—known as intragovernmental debt.
Few areas of life are as poorly understood as trade. This is remarkable because each of us engages in trade every day. We buy our groceries, clothing, electronics, etc. from other people rather than making them ourselves. If we didn’t think trade was worthwhile, we wouldn’t do it. But we do—because we know how poor we would be if each of tried to make all the things we want.
Americans currently owe about $1.5 trillion in student debt. Issuance of student loans has risen drastically in recent decades, and as a college degree becomes increasingly important, the loans look to continue to be a part of many young Americans’ economic lives. In this article, I examine existing answers to two main questions: why student debt has risen so much, and whether or for whom the returns to education justify this level of borrowing.
Ongoing federal budget deficits have required the U.S. Treasury to issue substantial amounts of debt to finance government spending. The Treasury has been able to easily issue debt since the federal government enjoys the highest credit rating, which lowers the interest rate that creditors demand. Historically low interest rates in general have further helped limit interest expense.
In 1900, President William McKinley signed the Gold Standard Act, explicitly making gold the only commodity exchangeable for U.S. paper money.
On May 24 the U.S. Court of Appeals for the District of Columbia Circuit will hear oral arguments on whether the Consumer Financial Protection Bureau (CFPB) is unconstitutional. The CFPB was created under the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, which passed in the wake of the 2008 Great Recession. The en banc court review of the CFPB, which follows a previous ruling that the bureau is unconstitutional, is a response to a claim it, unlike other regulatory agencies, is unaccountable to both presidential authority and Congress’s appropriations power. Its single director, who has a five-year term, cannot be removed by the president except “for inefficiency, neglect of duty, or malfeasance in office,” and it is funded not by Congress but by the Federal Reserve, which has no oversight power.
President Trump’s first budget proposal would zero out funding for the national endowments for the arts and humanities (NEA and NEH), the Corporation for Public Broadcasting (CPB), and the Institute of Museum and Library Services (IMLS). From the outcry you’d think the abolition of these agencies as government entities, whose combined 2016 appropriations totaled $971 million out of a nearly $4 trillion national budget (roughly 0.0003 percent), would leave America a cultural wasteland. We know this can’t be true, however, because America was the furthest thing from a cultural wasteland before the national government became subsidizing cultural activities. But historical memory is short, so it’s worth reminding ourselves that jazz, the blues, rock and roll, and modern dance, theater, and literature all flourished without the government’s help. Indeed, we have reason to think that no government bureaucracy would have appropriated money to these edge art forms when they first came on the scene.
In 2007, at the initiative of Chairman Ben Bernanke and New York Federal Reserve Bank President Timothy Geithner, the Federal Reserve System began a set of unprecedented credit allocation policies that have been wasteful, morally hazardous, studded with favoritism, and in some cases of dubious legality.