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Economic Freedom

The Opportunity-Killing Minimum Wage

By David R. HendersonHoover Institution

“The Right Minimum Wage: $0.00.” That was the title of a 1987 editorial in a major American newspaper. The editorial stated: “There’s a virtual consensus among economists that the minimum wage is an idea whose time has passed. Raising the minimum wage would price working poor people out of the job market.” You might expect the Wall Street Journal editors to write something like that. But the editorial wasn’t in the Wall Street Journal. It did appear, though, in a prominent New York newspaper. Which one? The New York Times.

In a 1970 economics textbook, a famous Nobel Prize–winning economist wrote of 1970’s minimum wage rate of $1.60, “What good does it do a black youth to know that an employer must pay him $1.60 per hour if the fact that he must be paid that amount is what keeps him from getting the job?” Who wrote that? It must have been free-marketer Milton Friedman, right? Wrong. The author of that statement was liberal economist Paul Samuelson.

Among non-economists and politicians, the minimum wage is one of the most misunderstood issues in economic policy. President Biden and almost all Democrats and some Republicans in the US Congress advocate increasing the federal minimum wage from its current level of $7.25 an hour to $15 an hour over four years. They argue that many of the workers earning between $7.25 and $15 will get a raise in hourly wage. That’s true. But what they don’t tell you, and what many of them probably don’t know, is that many workers in that wage range will suffer a huge drop in wages—from whatever they’re earning down to zero. Other low-wage workers will stay employed but will work fewer hours a week. Many low-wage workers will find that their non-wage benefits will fall and that employers will work them harder. Why all those effects? Because an increase in the minimum wage doesn’t magically make workers more productive. A minimum wage of $15 an hour will exceed the productivity of many low-wage workers.

The reason some workers earn low wages is not that employers are greedy exploiters. If exploitation were enough to explain low wages, then why would employers ever pay anyone over $7.25 an hour? Wages are what they are because they reflect two things: (1) workers’ productivity and (2) competition among employers.

Employers don’t hire workers as a favor. Instead, employers hire workers to make money. They hire people only if the wage and other components of compensation they pay are less than or equal to the value of the worker’s productivity. If an employer pays $10 an hour to someone whose productivity is $15 an hour, that situation won’t last long. A competing employer will offer, say $12 an hour to lure the worker away from his current job. And then another employer will compete by offering $13 an hour. Competition among employers, not government wage-setting, is what protects workers from exploitation.

We all understand that fact when we see discussions on ESPN about why one football player makes $20 million a year and another makes “only” $10 million a year. Everyone recognizes the twin facts of player productivity and competition among NFL teams. The same principles, but with much lower wages, apply to competition among employers for relatively low-skilled employees.

Open up almost any economics textbook that discusses the minimum wage and you’ll likely see a demand and supply graph showing that the minimum wage prices some low-wage workers out of the market. For textbooks published in the past twenty years, though, you might also find a statement that although some workers will lose their jobs, there’s controversy among economists about how many jobs will be lost. According to the textbook writers, some economists think the number will be large and others think it will be small or even imperceptible. You could easily conclude that there’s no longer a consensus among economists that an increase in the minimum wage would cause much job loss.

But that conclusion would be wrong. UC-Irvine economist David Neumark and Peter Shirley, an economist with the West Virginia Legislature’s Joint Committee on Government and Finance, showed that in a January 2021 study published by the National Bureau of Economic Research. Neumark is one of the leading scholars on the economic effects of minimum wages.

Neumark and Shirley chose a clever methodology. They read every published study of the effects of the minimum wage on employment in the United States that was done between 1992 and the present. They identified for each study the core estimates of the effect of minimum wages on employment. When that was difficult to do, they contacted the studies’ authors to ask them what they regarded as their bottom-line estimates. Sixty-six studies met their criteria and these criteria had nothing to do with the size or direction of the estimates.

Here’s what they found. The vast majority of studies, 79.3 percent, found that a higher minimum wage led to less employment. A majority of the studies, 55.4 percent, found that the negative effect of a higher minimum wage on employment was significant at the 10 percent level. Translation: for those studies, the probability that there was a negative effect on jobs was 90 percent. Almost half the studies, 47.9 percent, found a negative effect on jobs at the 5 percent confidence level. For those studies, in other words, the probability that there was a negative effect on jobs was 95 percent.

Moreover, found Neumark and Shirley, the evidence “of negative employment effects is stronger for teens and young adults, and more so for the less-educated.” They concluded that the commonly heard refrain that minimum wages don’t destroy jobs “requires discarding or ignoring most of the evidence.”

Moreover, virtually all the studies of the effects of minimum wages in the United States have considered increases in the minimum wage of between 10 and 20 percent. The US government has never raised the minimum wage by anything close to the 107 percent envisioned in the increase from $7.25 to $15.

Why does that matter? Because the higher is the increase as a percent of the existing minimum wage, the more certain we economists are that it will hurt job opportunities for unskilled workers. We are sure of that because of the law of demand, which says that for any good or service, the higher the price, the less is demanded. That applies whether we’re talking about iPhones, skateboards, or labor. So raise that price a lot, and the amount demanded falls more than it would fall if you raised it a little. And what employers don’t demand, willing workers can’t supply.

The effect of the $15 minimum wage would vary a lot from state to state. In New York in 2019, the median hourly wage was $22.44 and the average hourly wage was $30.76. So a $15 minimum would affect a fairly small percent of New York’s labor force. In Alabama, by contrast, the median hourly wage in 2019 was only $16.73 and the average was only $21.60. So the $15 minimum in Alabama could hurt a much greater percent of the labor force.

The University of Chicago’s Booth School has an Initiative on Global Markets (IGM) that occasionally surveys US economists on policy issues. Possibly because of the surveyors’ understanding that the $15 minimum wage would hurt some states more than others, the IGM recently made the following statement and asked forty-three economists to agree or disagree: “A federal minimum wage of $15 per hour would lower employment for low-wage workers in many states.” Unfortunately, the question did not specify what is meant by “many.” Is it ten, twenty, thirty? Some economists surveyed pointed out that ambiguity. That ambiguity could explain why a number of the economists answered that they were uncertain. But of those who agreed or disagreed, nineteen agreed that it would cause job loss in many states and only six disagreed.

One economist who disagreed, Richard Thaler of the University of Chicago, gave as his explanation this sentence: “The literature suggests minimal effects on employment.” No, it doesn’t. As noted earlier, the federal government has never tried to raise the minimum wage by such a large amount and so there is no scholarly literature on such an increase. Would Thaler say that if putting a cat in the oven at a temperature of 72.5 degrees Fahrenheit doesn’t hurt the cat, then putting a cat in the oven at 150 degrees wouldn’t hurt the cat either?

While few economists have actually estimated the effects of such a large increase in the minimum wage, the US Congressional Budget Office (CBO) presented its economists’ estimate earlier this month. According to the CBO, the increase would reduce US employment by 0.9 percent. That might not sound like much, but 0.9 percent translates into 1.4 million workers put out of work.

But wouldn’t the increase in the minimum wage also increase wages for a lot of workers who keep their jobs? Yes, it would, and the CBO estimates that although the workers who lose their jobs would lose income, their loss over the years from 2021 to 2031 would be “only” 34 percent of the gain to the workers who gained wages.

But the gain in wages is not an unalloyed benefit to those who gain. The reason is that, as noted above, an increase in wage rates doesn’t automatically make workers more productive. So employers, looking for ways to avoid paying more to workers than their productivity is worth, would search out other ways of compensating. They might cut non-wage benefits, work the employees harder, or reduce training, to name three. Interestingly, on its website in 2006, when Congress was considering an increase in the federal minimum wage, the Economic Policy Institute (EPI), an organization funded partly by labor unions, admitted the last two of these three. It stated, “employers may be able to absorb some of the costs of a wage increase through higher productivity, lower recruiting and training costs, decreased absenteeism, and increased worker morale.” How would an employer make his workers more productive and reduce absenteeism? Probably by working the employees harder and firing those who miss work. How would he reduce training costs? By providing less training. In an article in the winter 2021 issue of the Journal of Economic Perspectives, UC-San Diego economist Jeffrey Clemens noted a negative correlation between minimum wages and employer-provided health insurance. In the workplace as in the rest of the world, there’s no free lunch.

The late economist Walter Williams has written about how, as a teenager, he learned many skills on the job that made him more productive and ultimately higher paid. I wrote recently that he could get those early jobs because the minimum wage was so low. Low-paid jobs are often crucial for black youths and other youths who need to build their work skills and work histories. These skills might be as simple as learning to show up on time. In 1967, when I was sixteen, I worked in a kitchen at a summer resort in Minaki, Ontario. The minimum wage at the time was $1 an hour and I was paid, if I recall correctly, $1.25 an hour. For the first three days of the job, I showed up about twenty minutes late. On the third day, the chef told me that if I was late the fourth day, I shouldn’t bother showing up because I would be fired. I was never late again. I learned the “skill” of punctuality. We adults take such things for granted. Kids don’t. Raise the minimum wage enough and a whole lot of young people won’t learn the basics, or won’t learn them until later in life. That would be tragic.


America’s Excessive Government Spending Must Stop

Before his death on February 6, George P. Shultz, a former US Secretary of the Treasury and Secretary of State, co-authored a final commentary warning of the dangers posed by the vast increase in US government spending in recent years, including during the COVID-19 crisis.

By GEORGE P. SHULTZ , JOHN F. COGAN , JOHN B. TAYLORProject Syndicate

shultz2_Liu JieXinhua via Getty Images_federal reserve

STANFORD – Many in Washington now seem to think that the US federal government can spend a limitless amount of money without any harmful economic consequences. They are wrong. Excessive federal spending is creating grave economic and national-security risks. America’s fiscal recklessness must stop.

The COVID-19 crisis has provided the latest impetus for government spending, even to the point of steering the American mindset toward socialism – a doctrine that has always harmed people’s well-being. But some say there is no need to worry about excessive spending. After all, they argue, record-low interest rates apparently show no sign of increasing. The economy was humming along just fine until the pandemic hit, and will no doubt rebound strongly when it ends. And is there even a whiff of inflation in the air?

This thinking is dangerously short-sighted. The fundamental laws of economics have not been repealed. As one of us (Cogan) demonstrated in his book The High Cost of Good Intentions, profligate government spending invariably has damaging consequences.

High and rising US national debt will eventually crowd out private investment, thereby slowing economic growth and job creation. The Federal Reserve’s continued accommodation of deficit spending will inevitably lead to rising inflation. Financial markets will become more prone to turmoil, increasing the chance of another big economic downturn.

Financial markets’ current relative calm and low consumer-price inflation are no cause for comfort. Previous periods of sharp increases in inflation, rapidly rising interest rates, and financial crises have followed periods of excessive debt like a sudden wind, without warning.

Shultz and Taylor’s book Choose Economic Freedom shows that economic indicators in the United States gave no hint in the late 1960s of the subsequent rapid rise in inflation and interest rates in the early 1970s. Likewise, financial markets during the years immediately preceding the 2007-09 Great Recession provided little indication of the calamity that would ensue.

So, what should today’s US policymakers do? Higher tax rates are not the answer. Even before the pandemic hit, every federal tax rate would have had to be increased by one-third in order to finance the current level of federal spending without adding to the national debt. Such an increase would have harmful effects – similar to those of mounting public debt – on economic growth and job creation.

Congress may be tempted to reduce defense spending to help close the deficit, as it often has done in the past. But these previous efforts demonstrably failed. Rather than reduce the budget deficit, Congress instead used the savings from lower defense outlays to finance additional domestic spending.

Unless policymakers abandon their misguided beliefs about budget deficits, cutting defense expenditure now would produce the same result. More importantly, it would be a grave strategic mistake, weakening US national security and emboldening the country’s foreign adversaries – particularly now that China is flexing its muscles in Asia and investing heavily in its military.

Throughout US history, the federal government’s ability to borrow during times of international crisis has proven to be an invaluable national-security asset. Two hundred years ago, the ability to borrow was instrumental in America maintaining its independence from England. During the Civil War, it was crucial to preserving the union. And it proved decisive in defeating totalitarian regimes in the two world wars of the twentieth century.

The US government’s careless spending is jeopardizing this asset. If the country continues along its current fiscal path, the federal government’s borrowing well will eventually dry up. When it does, America will be far less able to counter national-security threats. As hostile foreign governments and terrorist organizations recognize this, the world will become a far more dangerous place.

US policymakers’ mistaken belief that deficits and debt don’t matter is the sad culmination of a long downward slide in fiscal responsibility. From 1789 to the 1930s, the federal government adhered to a balanced-budget norm, incurring fiscal deficits during wartime and economic recessions, and running modest surpluses during good times to pay down this debt. This prudent management of the federal finances was instrumental in establishing America’s strong position in world financial markets.3

President Franklin D. Roosevelt’s New Deal broke this norm, and deficit spending has since become a way of life in Washington, with the federal government outspending its available revenues in 63 of the 75 years since the end of World War II. At first, elected officials were deeply concerned about the adverse consequences of their excess spending. But over time, this anxiety gradually lessened. Annual deficits grew so large that by the mid-1970s the US national debt was growing faster than national income.Sign up for our weekly newsletter, PS on Sunday

During the last decade, any remaining fiscal concerns in either the Democratic or Republican parties have seemingly vanished. Freed from a belief that rising deficits and debt are harmful, policymakers unleashed a torrent of new spending. By fiscal year 2019, the federal government was spending $1 trillion per year more in inflation-adjusted terms than it had a dozen years earlier. In fiscal year 2020, the federal government added nearly another $2 trillion of new spending in response to the pandemic, raising the national debt to 100% of national income. This year, another trillion dollars of new spending – if not more – appears to be on the way.

The momentum toward more spending and exploding debt may currently appear unstoppable. But sooner or later, people will look at the facts, see the destructive path fiscal policy is now on, and recognize that they and the US economy will be better off with a different approach. At that point, America’s democratic system will say the expenditure growth must stop.


Americans Expect Masking to Continue Even as COVID Numbers Crash

By Peter RoffAmerican Action News

Covid-19, coronavirus

The number of new COVID infections is declining rapidly, suggesting to some that the novel coronavirus pandemic may be on the verge of ending. Nevertheless, even with the advent vaccines that apparently prevent its transmission from person to person, most Americans believe the protective measures adopted over the last year like mandatory masking will continue for some time. 

A recent Rasmussen Reports poll found that nearly three out of every four Americans over the age of 18 expect the requirement that masks be worn outdoors will remain in place for at least another six months. Almost a third – 36 percent – said it would be more than 18 months before it would be acceptable to be barefaced in public once again.

“It’s an indictment of the media that so many people expect mask mandates to persist for months,” said the Committee for Prosperity’s Phil Kerpen who has for months been crunching the numbers related to the pandemic and its spread. 

Kerpen and his group produce a free daily hotline that provides short and timely insider updates on what is happening with the economy and the virus. It was one of the first to notice that New York’s Democratic Gov. Andrew Cuomo seemed to be fudging the numbers connected to COVID-19 in nursing homes, a story most news outlets missed. 

With Vice President Kamala Harris and others inside the Biden Administration claiming, falsely, that they’ve had to begin the fight against the coronavirus “from scratch,” the recent acknowledgment by Dr. Rochelle Walensky, the director of the U.S. Centers for Disease Control and Prevention that the number of new cases and hospitalizations are indeed coming down. 

“We continue to see a five-week decline in COVID cases, with cases decreasing 69 percent in the seven-day average since hitting a peak on January 11th.  The current seven-day average of approximately 77,000 cases is the lowest recorded since the end of October,” Dr. Walensky said during a White House briefing Friday. 

“Like new COVID-19 cases, the number of new hospital admissions continues to drop.  The seven-day average of new admissions on February 16th, approximately 7,200, represents a 56 percent decline since the January 9th peak,” the doctor continued. 

The problem remains what to do until what many medicos refer to as “herd immunity” is reached.  Some, like Biden COVID advisor Dr. Anthony Fauci, have suggested it may be prudent to double up on masks while the CDC’s latest recommendation is “placing a sleeve made of sheer nylon hosiery material around the neck and pulling it up over either a cloth or medical procedure mask.” Others, like Kerpen, suggest the best possible thing would be for states to open up and for people to be allowed to go about their business once again, and for children to be permitted to return to school on a five-day-per-week schedule. 

“More governors need to exercise the leadership of Florida’s Ron DeSantis, the Dakota’s Kristi Noem and Doug Burgum, and Kim Reynolds of Iowa and proclaim a return to normal now – now, forever, months in the future,” Kerpen said. 

His suggested approach appears to be the wise one. Recent comparisons of the spread of COVID-19 in Florida and California show little difference in how things have turned out. This would seem to deflate the dire predictions Gov. DeSantis’s decision to re-open the economy in the nation’s third most populous state would push the number of infections and death off the charts. 

None of that seems to have happened. What is different is that Florida’s been open for business for some time while California’s economy, which for months has been in a lockdown state, is floundering badly. The performance of the two economies, which are about as different at this point as night and day, are worth further study. There may be valuable clues regarding the best ways to fight a pandemic hidden in the data, waiting to be unmasked.


DR. RAND PAUL INTRODUCES ‘THREE PENNY PLAN BALANCED BUDGET’

U.S. Senator Rand Paul (R-KY) recently introduced his own “Three Penny Plan” federal budget that will balance within five years by assuming the repeal of the Bipartisan Budget Act of 2021 and utilizing the “Three Penny Plan.” Dr. Paul’s budget includes instructions that would pave the way for the expansion of Health Savings Accounts (HSAs) to help Americans more easily cover their health care costs.

“When I started offering these kinds of budgets four years ago, we could balance with a freeze in spending. Not cut anything, then we went to just a penny, then two, now it is three,” said Dr. Paul. “We cannot keep ignoring this problem, this budget sets a goal for balance and provides Congress with necessary tools to achieve that objective.”

“Senator Rand Paul has long been a champion of balancing the federal budget and protecting the American taxpayer,” said Frontiers of Freedom President George Landrith. “Too often opponents of fiscal responsibility argue that to balance the budget would require draconian cuts. But Senator Paul’s proposal only requires a budget cut of 3 pennies on the dollar each year for the next five years and then limits spending increases thereafter by 2 percent per year.”

“Senators should support Rand Paul’s balanced budget plan to expand HSAs, reject tax hikes, and reduce spending by 3 pennies for every dollar,” said Americans for Tax Reform President Grover Norquist.

“I’m glad to see Senator Rand Paul continue his work to address the rampant growth in federal spending and the national debt,” said American Legislative Exchange Council Chief Economist Jonathan Williams.

Dr. Paul’s plan requires that for every on-budget dollar the federal government spends in Fiscal Year 2021, it spends three pennies fewer each year for the next five years. Senator Paul’s proposal doesn’t change anything about Social Security, but reduces spending by $67.4 billion in Fiscal Year 2022 and by $7.2 trillion over ten years.


Fact Versus Fiction: An Analysis on Eric Schmidt’s Claims on 5G

By Joel L. Thayer

On February 8, 2021, the Financial Times published an op-ed authored by Eric Schmidt titled US’s Flawed Approach to 5G Threatens Its Digital Future. In it, Mr. Schmidt makes a series of claims, but his central theme is that the U.S. is not doing enough to promote our 5G infrastructure and, worse, forcing us to forfeit the U.S.’s dominant position in the race to 5G to China. He even goes as far as to suggest that the U.S. should throw the proverbial baby out with the bathwater by adopting a more nationalized approach to 5G vis-a-vis the Department of Defense (DoD) spectrum sharing plan. In this article, I address the most glaring of his assertions to put the 5G debate in the proper context. 

Claim: “…China, is already far ahead [in 5G].”

Response: Mr. Schmidt’s article does not provide a metric when he says that China is “far ahead.” Based on the article, it appears that Mr. Schmidt might be comparing the two countries in the following ways: 1) internet speeds; and 2) national 5G coverage. In each case the United States is excelling. Although both countries have taken very different approaches to 5G, both countries’ 5G strategies involve blending their 4G/LTE networks with their nascent 5G networks. Hence, it is appropriate to compare the countries’ progress on those measures.  

In terms of broadband speeds, China has an average internet speed of just 105.2 mbps where the United States has an average of 124.1 Mbps. In terms of broadband speed, we are far ahead of China.  Moreover, a study conducted by Global Wireless Solutions released network performance testing from Super Bowl LV in Tampa and found that all three of the nation’s carriers averaged more than 1 gigabit per second on their respective 5G networks, which for the uninitiated means that we have past light speed and are now entering into ludicrous speed. Hence, we are certainly leading in this area.

In terms of 5G coverage, China appears to be deploying far more infrastructure than the U.S., but basing  China’s success in 5G purely on the amount of infrastructure deployed may be misguided.  The main issue China is having is making its 5G infrastructure compatible with its 4G/LTE networks. This issue is so prevalent that Huawei’s Ryan Ding described China’s 5G rollout as “fake, dumb, and poor,” because most of the applications China is calling 5G is really just disrupted 4G due to the frequent and sporadic handover between the two networks. This is distinct from the U.S.’s plan where it and its carriers have a slower deployment strategy to ensure that its 5G networks can efficiently interoperate with its 4G/LTE networks. However, China’s aggressive 5G policy should be taken seriously, but we should not assume that China is in fact “ahead” of anyone. 

The one place where China may pose a competitive threat is in spectrum. This is because China can more easily clear incumbents from spectrum bands for 5G due to its heavier regulatory control when it comes to property rights. Also, China has much more local zoning control over deployment. It is similar to its government’s control on spectrum where it relies on heavy centralized state control allowing quicker infrastructure deployment without public input.  If the U.S. wanted to emulate China’s approach, then Mr. Schmidt is essentially advocating that the U.S.  allow the FCC to clear bands with disregard to the property rights of incumbents  operating in those bands. 

Claim: The FCC’s C-Band Auction is a “digital setback,” because the auction provided “no meaningful requirement to build necessary network infrastructure.” 

Response: This criticism is simply untrue. As it relates to its C-Band Order, the FCC requires C-Band licensees to meet multiple performance metrics based off of the service or services the provider wishes to provide. For example, In paragraph 93 of the C-Band Order, the FCC requires licensees in the A, B, and C Blocks offering mobile or point-to-multipoint services must provide reliable signal coverage and offer service to at least 45% of the population in each of their license areas within eight years of the license issue date (i.e., first performance benchmark), and to at least 80% of the population in each of their license areas within 12 years from the license issue date (i.e., second performance benchmark). These population benchmarks are actually more aggressive than those for other flexible-use services under part 27 of the FCC’s rules.

There are even performance metrics for licensees providing IoT-type fixed and mobile services on paragraphs 97-99. The C-Band Order requires licensees providing Fixed Service in the A, B, and C Blocks band to demonstrate within eight years of the license issue date (first performance benchmark) that they have four links operating and providing service, either to customers or for internal use, if the population within the license area is equal to or less than 268,000. If the population within the license area is greater than 268,000, the FCC requires a licensee relying on point-to-point service to demonstrate it has at least one link in operation and providing service, either to customers or for internal use, per every 67,000 persons within a license area. The FCC requires licensees relying on point-to-point service to demonstrate within 12 years of the license issue date (final performance benchmark) that they have eight links operating and providing service, either to customers or for internal use, if the population within the license area is equal to or less than 268,000. If the population within the license area is greater than 268,000, the C-Band Order requires a licensee relying on point-to-point service to demonstrate it is providing service and has at least two links in operation per every 67,000 persons within a license area.

Claim: “Future auctions must set stringent build requirements, with penalties for underperformance.” 

Response: In paragraphs 102-103 the C-Band Order goes into detail about the penalties for each licensee for not meeting the performance metric. For example, the C-Band Order outlines that, in the event a particular licensee fails to meet its performance benchmark, the licensee will have its license term substantially reduced and, when the shortened term is exhausted, the C-Band Order states that “licensee’s spectrum rights would become available for reassignment pursuant to the competitive bidding provisions of section 309(j) [of the Communications Act of 1934 that articulates restrictions on spectrum license applications] and any licensee who forfeits its license for failure to meet its performance requirements would be precluded from regaining the license.” 

Claim: “Pursue alternatives to auctions.” 

Response: Mr. Schmidt’s statement is myopic as auctions are only one way the U.S. has advanced 5G. His article failed to review or even mention the myriad of 5G policies in place now. In fact, the U.S. has taken an holistic approach to advance our 5G networks through: 1) a series of subsidy programs (e.g., Rural 5G Fund, RUS Fund, USF programs, etc.); 2) clearing spectrum and auctions (e.g., 24 GHz Auction, CBRS, Ligado Order, and, yes, the C-Band auction); 3) granting key mergers (e.g., T-Mobile-Sprint, AT&T-Time Warner, etc.); and 4) lowering regulatory burdens for wireless infrastructure (e.g., 5G Upgrade Order, 5G Small Cell Order, One Touch Make Ready Order, 6409 Order). Again, Mr. Schmidt fails to mention or even allude to these policies focused on infrastructure. 

Claim: “The defense department has proposed sharing government-controlled spectrum with commercial providers if they build infrastructure quickly.”

Response: Mr. Schmidt’s endorsement of the DoD’s proposal is misguided.As I and others have argued before, the DoD’s blue-chip in 5G is that it sits on most of our Nation’s valuable mid-band spectrum, which is essential for 5G deployment. This is clearly evident from every other countries’ inclusion of these frequencies in their respective 5G plans. This is especially true in the case of China that is a leader in mid-band spectrum deployment for 5G. The DoD’s frequencies in its RFI (i.e., 3450-3550 MHz) are prime “beachfront” mid-band spectrum and are critical to open up for commercial use. This is because U.S. commercial 5G networks are severely lacking in mid-band spectrum; a fact of which the DoD is well aware. DoD’s offer to industry is, thus, enticing, but it comes at a hefty price: every carrier must go through the DoD to access this mid-band spectrum that they all will need to make their networks functional. This is a Hobson’s choice for carriers: either they want a functioning 5G network or not. Hence, they will be compelled to work with DoD if this proposal moves forward. This will most likely translate into the DoD being yet another bureaucratic barrier of entry for carriers looking to deploy 5G, which, in turn, slows down the deployment that Mr. Schmidt says the DoD’s plan will promote.

Conclusion 

In his article, Mr. Schmidt makes assertions that are either exaggerated, myopic, or confused on the issues of 5G.  We can both agree that China’s growth in the area is concerning. However, the arguments Mr. Schmidt presents regarding our auctioning process are not at all the issue and, ironically, is an example of the U.S.’s success in this technological race.

• • • • • • • • • •

Joel L. Thayer is an attorney with Phillips Lytle LLP and a member of the firm’s Telecommunications and Data Security & Privacy Practice Teams. Prior to joining Phillips Lytle, he served as Policy Counsel for ACT | The App Association, where he advised the Association and its members on legal and regulatory issues concerning spectrum, broadband deployment, data privacy, and antitrust matters. Prior to ACT, he also held positions on Capitol Hill, as well as at the FCC and FTC. The views expressed here are his own and do not reflect those of Phillips Lytle LLP, or the firm’s clients.


New Budget Reconciliation Resolution Portends Dangerous Debt Trends

The resolution predicts the national debt will reach $41 trillion in 2030.

By Marc Joffereason foundation

Congressional Democrats are currently using the budget reconciliation process to advance President Joe Biden’s $1.9 trillion COVID-19 relief and stimulus measure, the American Rescue Plan. The budget reconciliation process can be used to move federal spending, debt, and budget bills more quickly through the legislative process.

Friday, Senate Democrats used this process to approve a concurrent resolution that calls for a $3.8 trillion federal deficit this fiscal year followed by a $1.5 trillion deficit in 2022. Committees in the House and Senate still need to draft the actual coronavirus stimulus legislation but the resolution, which also includes 10 years of projected federal budget data, forecasts the national debt reaching a total of $41 trillion in the 2030 fiscal year. The national debt is currently over $27 trillion.

Because the national debt includes intragovernmental borrowing—money that the federal government owes to itself—it is a less useful measure of overall federal indebtedness than debt held by the public. Debt held by the public consists of all Treasury securities held by individuals and organizations that are not part of the federal government. Much of the debt held by the public has been purchased by the Federal Reserve, which is technically not part of the federal government. The budget anticipates this debt will rise to $36.5 trillion in 2030.

It is possible to compute projected debt-to-gross domestic product (GDP) ratios by dividing the publicly held debt projections from the Senate resolution by the Congressional Budget Office’s new GDP forecasts, which were released on Feb. 1.

The results of such a comparison are worrying. As shown in Figure 1, by the end of the current fiscal year, publicly-held debt as a percentage of GDP is forecast to eclipse its previous peak of 106 percent reached just after World War II. The ratio continues to rise gradually through 2030 when it is expected to reach 115 percent.

Figure 1: Federal Debt Held by the Public As a Percent of GDP

As the chart shows, there was a large uptick in recent years, with President Donald Trump adding nearly $8 trillion to it during his four-year presidency.  And these projections for future budgets through the 2030 fiscal year could be underestimating the debt, as the report assumes the federal government will make an unlikely return to budgets with sub-trillion-dollar deficits in 2024, 2026, and 2027.

The debt forecast also does not include the impact of potential new spending, like the infrastructure package President Biden has called for, which Congress may attempt to pass through a second budget reconciliation.

While debt-to-GDP ratios in excess of 100 percent may be manageable in an environment with low interest rates, if interest rates spike upward then debt service costs could quickly crowd out other federal spending and economic activity. In the most extreme cases, spiraling debt could eventually help cause a sovereign debt crisis like those seen in Argentina and Greece in recent years.


Sen. Elizabeth Warren Plans to Tax Everything

By Peter RoffAmerican Action News

Gage Skidmore from Surprise, AZ, United States of America via Wikimedia Commons

Now that she’s a member of the tax-writing Senate Finance Committee, Massachusetts Sen. Elizabeth Warren plans to give the progressive agenda a boost by introducing a bill that would create the nation’s first-ever tax on total assets.

This so-called “wealth tax” would consider anything and everything owned by a taxpayer in computing the taxes owed. More than double taxation – which is taxing the same income twice as happened with the Death Tax – the taxes the former Democratic presidential candidate wants to put on the books would essentially tax savings, investments, and real property over and over and over again.

According to some early static estimates, Warren’s proposal could generate as much as $2.75 trillion per year – but that does not take into account any change in behavior that might occur on the part of the taxpayers on whom it would be assessed.

A study recently released by the non-partisan American Action Forum found a wealth tax would lead to a decrease in innovation and investment, drive down wages and cause unemployment and produce a $1.1 trillion shrinking in U.S. gross domestic product over the first ten years of its existence. In subsequent decades, GDP would be smaller by about $283 billion, a 1 percent annual decrease from current projections. 

The Warren plan would impose this new tax, published reports indicate, on taxpayers with assets above $50 million at a top rate of 6 percent per year while giving the U.S. Internal Revenue Service far greater power than it currently enjoys. With a wealth tax on the books, the IRS would have to hire thousands of new agents and auditors to keep track of all the assets held by those of whom the tax falls, to account for them, and assign them proper valuation at tax time. 

Also included in the draft of Warren’s plan circulating through the nation’s capital is a 40 percent “exit tax” to be imposed on anyone who seeks to leave the United States permanently and is reminiscent of the so-called “tax” forced upon Jewish individuals and families seeking to emigrate from Nazi Germany in the years prior to the onset of World War II.

There are some, even in Warren’s own party, who doubt the plan is legitimate. 

“We are tax law professors who identify as liberal Democrats, donate to Democratic candidates, publicly opposed the Trump tax cuts, and strongly support higher taxes on the affluent,” Daniel Hemel and Rebecca Kysar recently wrote in the New York Times. “We are worried, though, that leading figures in our party are coalescing around an idea whose constitutionality is doubtful at best.”

Warren’s plan is one of several under consideration on Capitol Hill that, on paper, raise tremendous amounts of money for the U.S. government. Unlike tax changes that achieve such ends by stimulating economic growth, however, her plan would simply redistribute income already earned, long a progressive objective.

To date, there has been no comment from the Biden Administration on the Warren wealth tax or any of the similar proposals under consideration. For his part, President Joe Biden remains committed to his promised repeal of the Tax Cuts and Jobs Act in its entirety. If he’s successful, that would violate his repeated campaign pledge in which he vowed no American family making less than $400,000 per year would see their taxes go up “by one thin dime.”


Frontiers of Freedom’s Statement on U.S. Senator Rand Paul’s Substitute Budget Amendment

Washington, DC – February 4, 2021 — George Landrith, president of Frontiers of Freedom, released the following statement on U.S. Senator Rand Paul’s Substitute Budget Amendment: 

Senator Rand Paul has long been a champion of balancing the federal budget and protecting the American taxpayer.  Too often opponents of fiscal responsibility argue that to balance the budget would require draconian cuts.  But Senator Paul’s proposal only requires a budget cut of 3 pennies on the dollar each year for the next five years and then limits spending increases thereafter by 2 percent per year.  Senator Paul’s proposal doesn’t change anything about Social Security, but it reduces federal spending by $7.2 trillion over 10 years compared to the baseline.  

Senator Paul, who is a Medical Doctor, also expands Health Savings Accounts as a way to promote preventive medical care and reduce overall healthcare costs.  

Getting the federal budget under control will strengthen America and protect the taxpayer as well. And it will allow the federal government to focus on its top priorities — which must always include national security and defense. When our budget is spiraling out of control, our ability to provide a robust defense is hampered.  And our adversaries can use our financial troubles to weaken us.  So Senator Paul’s proposal should be welcomed by all who are concerned about threats from abroad. 

Senator Paul deserves an A grade for this proposal.  Let’s hope that enough Senators see the merits of getting our federal budget under control so that in future years, the economy can grow, and taxpayers are not saddled with a staggering and stifling debt load and the federal government can focus on its most fundamental and important priorities. 

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New Mexico, Other Western States, Native American Tribes All Up In Arms Over Biden Energy Decisions

By Nick AramaRed State

AP Photo/Evan Vucci

We touched on the concerns of folks in New Mexico over Joe Biden’s 60-day moratorium on new oil and natural gas leases and drilling permits. 

But it’s a huge problem now and would devastate the state if that were made permanent, according to leaders in New Mexico. Not to mention if Biden then forbids fracking on public lands. 

Half of New Mexico’s production is on federal lands. It provides over 100,000 related jobs and it’s what provides money for education and other government programs. It will crush the state’s economy which is already struggling, according to Carlsbad Mayor Dale Janway. 

From AP: 

“During his inauguration, President Biden spoke about bringing our nation together. Eliminating drilling on public lands will cost thousands of New Mexicans their jobs and destroy what’s left of our state’s economy,” Carlsbad Mayor Dale Janway told The Associated Press on Friday. “How does that bring us together? Environmental efforts should be fair and well-researched, not knee-jerk mandates that just hurt an already impoverished state.”

Plus the order is halting all regulatory activity, even that which does what Democrats claim they want, requests for rights of way for new pipelines to reduce venting and flaring which Democrats claim exacerbates climate change. 

One could say all this was out there to know, but New Mexico was called for Biden. So what were the people who actually voted for Biden there thinking? They were seduced by media about President Donald Trump’s ‘mean tweets.’ Meanwhile now they’re going to get hit hard. 

It’s not just New Mexico that’s going to suffer, it’s other Western states as well, including the states who didn’t vote for Biden. 

Utah said that such a widespread suspension is unprecedented and incredibly harmful and they asked Biden to reconsider his “arbitrary decision.” 

But it’s not just states that Biden is attacking with this, as a Native American tribe points out. Luke Duncan, the chairman of the Ute Indian Tribe Business Committee, minced not words when he called Biden’s decision a “direct attack on our economy, sovereignty, and our right to self-determination.”

Here’s what their letter said.

From Daily Wire: 

The Ute Indian Tribe of the Uintah and Ouray Reservation respectfully requests that you immediately amend Order No. 3395 to provide an exception for energy permits and approvals on Indian lands. The Ute Indian Tribe and other energy producing tribes rely on energy development to fund our governments and provide services to our members.

Your order is a direct attack on our economy, sovereignty, and our right to self-determination. Indian lands are not federal public lands. Any action on our lands and interests can only be taken after effective tribal consultation.

Order No. 3395 violates the United States treaty and trust responsibilities to the Ute Indian Tribe and violates important principles of tribal sovereignty and self-determination. Your order was also issued in violation (of) our government-to-government relationship. Executive Order No. 13175 on Consultation and Coordination with Indian Tribal Governments, and Interior’s own Policy on Consultation with Tribal Governments.

The order must be withdrawn or amended to comply with Federal law and policies. Thank you for your prompt attention to this matter. We look forward from hearing from you.

While we might say if any of these folks voted for Biden, they should have known better, unfortunately this is not going to just hurt all these people, but it’s going to hurt all of us, translating in more expensive energy prices and losing that energy independence that President Donald Trump worked so hard to get for us.

It’s only Day 4 into this calamitous mess. How’s it going so far?


Contradicting Her Own Claim, Yellen Says Minimum Wage Hike Would Result in ‘Minimal’ Job Loss

Yellen backed 2014 report forecasting 500,000 lost jobs from minimum wage hike

By Collin AndersonThe Washington Free Beacon

Treasury secretary nominee Janet Yellen previously backed a 2014 report that found a $10.10 federal minimum wage could kill half a million jobs. On Tuesday, she claimed that a $15 minimum wage would result in “minimal” job loss.

Yellen testified before the Senate Finance Committee Tuesday morning, nearly two months after President-elect Joe Biden announced her nomination to head the Treasury Department. When Sen. Tim Scott (R., S.C.) criticized Biden’s plan to raise the minimum wage to $15, noting that it could “hurt our economy as much as it would improve our economy,” Yellen defended the proposal.

“I think that the likely impact on jobs is minimal,” Yellen said. “That’s my reading of the research.”

But Yellen endorsed a 2014 report from the nonpartisan Congressional Budget Office predicting up to 500,000 lost jobs as a result of a $10.10 minimum wage. While the Obama administration lambasted the report, Yellen defended the CBO, calling the agency “good at this kind of evaluation” and adding that she “wouldn’t argue with their assessment.” The CBO later found that a $15 minimum wage could kill as many as 3.7 million jobs, with total real family income dropping by $9 billion.

Biden has made a $15 minimum wage a key pillar of his economic package, but the policy is likely to face hurdles in an evenly split Senate. At least 10 Senate Republicans must back Biden’s proposal to avoid a filibuster, and many GOP lawmakers have already expressed their opposition. Sen. Pat Toomey (R., Pa.), for example, said that the proposal would cause “many low-income Americans” to “lose their current jobs and find fewer job opportunities in the future.”

Employment Policies Institute managing director Michael Saltsman echoed Toomey’s claim, telling the Washington Free Beacon that a $15 minimum wage would harm small businesses struggling to stay afloat during the coronavirus pandemic.

“It’s frankly irresponsible for the Biden administration to propose this at any time, but especially at a time when restaurants are dealing with huge 2020 losses, continued mandatory closures, and millions of jobs that haven’t come back since the start of the pandemic,” Saltsman said.

The Biden transition team did not return a request for comment.


Watchdog Calls for Transparency from University of Pennsylvania’s Biden Center

Calls come as center's director, Biden's secretary of state nominee, undergoes Senate confirmation process

By Alana GoodmanThe Washington Free Beacon

Biden secretary of state nominee Antony Blinken / Getty Images

A good-government watchdog is calling on secretary of state nominee Antony Blinken to disclose any foreign-funding sources for the University of Pennsylvania’s Penn Biden Center, where Blinken served as director, as part of his Senate confirmation vetting process.

The National Legal and Policy Center (NPLC) is arguing thatany foreign money that made its way into the Penn Biden Center could pose a conflict of interest for Blinken, who served as the center’s director from 2017 to 2019 and received a more than $79,000 salary, according to his financial-disclosure records. The watchdog group said the university also saw a significant spike in contributions from China after the Penn Biden Center opened in 2017, raising questions about whether the funding had any connection to the policy center.

While President-elect Joe Biden has vowed to tighten ethics standards for his incoming administration, the Penn Biden Center’s lack of financial candor raises questions about the Biden cabinet’s commitment to transparency as Blinken testifies before the Senate Foreign Relations Committee on Tuesday afternoon.

“The Penn Biden Center is the poster child for revolving-door conflicts of interest,” said Tom Anderson, director of the NPLC’s Government Integrity Project. “It’s time they disclose their donors and allow the American people the opportunity to evaluate whether any lines have been crossed.”

The Penn Biden Center was founded by Joe Biden at the University of Pennsylvania in 2017. Biden’s other policy-research institute at the University of Delaware has faced similar criticism over a lack of transparency and has no plans to disclose its donors after the president-elect takes office. Both organizations have served as cabinets-in-waiting, employing former Biden advisers who are now expected to join his administration.

Stephen MacCarthy, a spokesman for the University of Pennsylvania, told the Washington Free Beacon that the Penn Biden Center “is funded entirely with University funds” and doesn’t engage in fundraising.

“The University has never solicited any gifts for the Center. Since its inception in 2017 there have been three unsolicited gifts (from two donors) which combined total $1,100. Both donors are Americans,” said MacCarthy.

MacCarthy declined to discuss additional details of the center’s funding, or the sudden spike in donations from China, on the record.

Foreign contributions to the University of Pennsylvania tripled since the Penn Biden Center’s soft opening in March 2017, rising from $31 million in 2016 to over $100 million in 2019. The largest foreign contributor was China, which significantly increased its gifts to the university after the Penn Biden Center opened.

The University of Pennsylvania took in around $61 million in gifts and contracts from China between 2017 and 2019, according to records from the Department of Education. This was a substantial uptick from the prior four years, when the university received $19 million from China.

Many of the Chinese contributions were listed as coming from “anonymous” sources, according to the university’s disclosure records. Between March 2017 and the end of 2019, the university received a total of $22 million in anonymous gifts from China—a spike from less than $5 million during the preceding four years.

Blinken’s work outside of the Penn Biden Center also involved China and university funding.

Blinken cofounded the consulting firm WestExec, which helped U.S. universities raise money from China without running afoul of Pentagon grant requirements, the Free Beacon reported last month. WestExec scrubbed the details of this work from its website over the summer.

Anderson said his group is preparing to file a supplement to a Department of Justice complaint filed against the University of Pennsylvania last year.

The NLPC’s complaint asked the DOJ to look into whether the University of Pennsylvania or the Penn Biden Center violated the Foreign Agent Registration Act by accepting foreign funding in exchange for promoting the interests of foreign governments. Anderson said the new complaint will include Blinken’s work assisting universities that receive funding from China.

Sen. Robert Menendez (N.J.), the senior Democrat on the Senate Foreign Relations Committee, told reporters that the committee will likely vote on Blinken’s confirmation on Monday.


United States Cut China Aid In Half In 2020

By Alex NesterThe Washington Free Beacon

Getty Images

President Donald Trump cut aid to China by 52 percent over the last year, the Spectator reported Friday.

The United States slashed $32 million in aid to China in fiscal year 2020, from $62 million in 2019 to $30 million, according to an Office of Management and Budget report.

The first government-wide China spending report comes as Trump enters the final days of his presidency. His administration implemented aggressive economic policies against China in an effort to thwart the Chinese Communist Party’s growing influence in the United States and the global market.

Trump campaigned in 2016 on combating Chinese economic policy, which he said “took advantage” of American citizens through trade imbalances and the manipulation of currency values.

The president’s efforts to curb Chinese influence in global politics and markets heated up last year after the onset of the coronavirus pandemic: In July, Trump moved to pull out of the World Health Organization for its failure to hold China accountable for its role in the deadly COVID-19 outbreak. He levied additional sanctions on companies that supported the Chinese military and fought Chinese influence at the United Nations. Additionally, the United States imposed $60 billion in tariffs on Chinese imports during fiscal year 2020.

Trump also cracked down on Confucius Institutes, which are tied to the Chinese Communist Party, for propagating Chinese disinformation at American universities.

Last week, Trump imposed sanctions on two Chinese apps over concerns that Chinese Communist Party officials could use them to collect data on Americans, including federal employees.

President-elect Joe Biden (D.) has criticized the president’s trade war with China. But he could face backlash from Congress if he softens the United States’ stance on Beijing, as politicians on both sides of the aisle support implementing economic measures to punish China for its human-rights abuses and combat the communist regime’s growing influence abroad.


Union Corruption Hurts Everyone. But It Harms the Most Vulnerable the Most.

By George LandrithTownhall

Union Corruption Hurts Everyone. But It Harms the Most Vulnerable the Most.
Source: AP Photo/Paul Sancya

This past year was one of the most tumultuous in memory. Widespread economic collapse, social and societal upheaval, violent riots, an acrimonious election cycle, and a worldwide pandemic are just a few of the major sources of upheaval.

These sorts of massive disruptions to the norm create opportunities for change and improvement. Some use those opportunities productively to work for solutions that fix real problems and improve lives. But sadly, many use these disruptions to cynically advance their own agenda while feigning concern for the plight of others. Unfortunately, organized labor falls into this latter group. 

In a time when so many Americans desperately want a job and a way to fund the hopes, dreams and aspirations of their family, too many union leaders are slamming the door shut on the very people they claim to serve. To make matters worse, too many union leaders are also padding their own pockets and working to advance their own power and influence at the expense of their members.

Here are a few recent examples. Dennis Williams, the former president of United Auto Workers (UAW), pled guilty to embezzling hundreds of thousands of dollars from the union. And this scandal was preceded by his successor at the UAW, Gary Jones, admitting that he helped steal more than a million dollars from union workers. That’s a bad trend line! 

James W. Cahill, a powerful and politically well-connected union leader, was indicted on racketeering and fraud charges. Federal prosecutors allege that he and others accepted bribes to aid companies that had hired nonunion labor. So the charges include accepting under the table money to work against your own members. But we are supposed to believe that the union is working to help union workers.

Chuck Stiles, the Director of the Teamsters Solid Waste and Recycling Division, has allegedly been taking large annual payouts of $65,000 for a “phantom job” on top of his $150,000 annual salary. These allegationsdon’t come from some union-hating critic, they come from an active member of the Teamsters Union. On top of that, there are allegations that Stiles’s son has also received a difficult-to-explain $10,000 payout from union funds. 

This sort of double self-dealing, if true, is very troubling and it raises the question — are these unions really representing their members or are they simply pretending to, and then enriching themselves while carrying on the charade.  

The cynicism doesn’t end with corrupt payments or self-dealing. For example, Stiles has decided to try to leverage the Black Lives Matter (BLM) movement to increase support for the struggling labor movement. Yet the labor movement has not historically been the friend of racial minorities. And Stiles has no history of supporting minority candidates or causes. Interestingly, a public photo of Stiles in blackface has also recently emerged. So the idea that Stiles has some deep commitment to helping blacks or other minorities is a little hard to swallow. It is a fair question to ask — how serious and how sincere is this newfound interest in minorities and their economic welfare? 

More than five million manufacturing jobs disappeared from the American economy between 1999 and 2011. The exodus of good paying jobs continued through 2016. China was the single biggest factor. This massive jobs exodus harmed working-class blacks, yet BLM has been silent on China and refused to support policies that would reverse our economic losses to the Communist Country. Instead, they’ve focused on odd conspiracy theories about obesity and diabetes in the black community — as if that has been more consequential to black employment and poverty than jobs being exported abroad.

Given all that has transpired, when BLM and unions claim to be teaming up to protect and promote the interests of working-class blacks, a huge dose of realism is needed. Who actually benefits when unions “team up” with BLM but they both refuse to actually do what is needed to promote good paying manufacturing and other skilled labor jobs? It won’t be minority workers. 

Someone who claims they support workers, must point to how they’ve helped make real improvements in the lives of workers — more jobs, higher wages, etc. This is not the track record of unions or BLM in the past two decades. They have done a good job of enriching themselves and raising money and obtaining political power for themselves. But where is the evidence that they have done anything for the average American worker — black or white? And why haven’t they supported policies that have actually worked and benefited American workers — and particularly minority workers?  

These questions answer themselves. Both unions and BLM do more posturing than actual good, and they are teaming up hoping to hide this inescapable truth so that they can continue to prosper while feigning concern for those they claim to represent.


BOOK: Covid-19 and the American Phoenix

Author: Dr. Miklos K. Radvanyi

On January 15, 2020, a man of Chinese descent and a U.S. resident in his 30’s, arrived in Seattle from Wuhan. When asked about his contacts in China, he clearly lied to the authorities, as the Chinese Communist Party did to the rest of the world about COVID-19 cases throughout the People’s Republic of China. This deliberate act of President Xi and his despotic party unleashed global suffering and devastation across the globe. Explore the historical constructs and political climate affecting recovery from the Novel Coronavirus, both worldwide and in the United States of America.

To buy this excellent book, click <here>.


McConnell’s Right – The $2000 Checks Are a Bad Idea

By Peter RoffNewsweek

How much is enough? It’s a question America is going to have to answer, and soon, lest the need for additional COVID relief packages overwhelm the nation’s ability to pay for them. The national debt, which was close to a single year’s gross domestic product when Donald J. Trump came into office four years ago, has more than doubled, thanks in no small part to efforts to alleviate the impact of the economic lockdown used to prevent the disease from spreading.

As the numbers show, it didn’t work. The states with some of the most severe restrictions on commercial activity, like California and New York, continue to lead the rest of the states in deaths per capita and new infections. It’s almost as if the wearing of masks, the requirements that people stay six feet apart from one another and not venture out into public and the closures of small businesses like restaurants and churches have done almost nothing to keep COVID-19 from spreading.

There are more than a few commentators who’ve been bold enough to suggest that outright. It’s going to take a lot more study of the data to determine if they’re right but what we now know is sufficient to suggest there’s more truth to these presumptions than many of the so-called experts driving the national dialogue are willing to entertain may be the case.

All that is for later. What matters now is whether the latest COVID-19 package is enough or, as President Donald J. Trump, House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer believe, if the American people need another round of so-called stimulus checks from Washington to make it though.

They don’t—and Senate Majority Leader Mitch McConnell was right when he stopped the bill to do just that from moving forward. If he erred, and it is not clear he did, it was in offering his own version of the bill that, along with the $2000 checks would eliminate a provision of federal telecommunications law that conservatives say allows major platforms like Twitter and Facebook to censor posts with impunity and establish a federal commission to make recommendations to combat voter fraud.

The Democrats could never vote for such a measure—big tech has invested too much in the party’s electoral success for them to sign on—so offering it as an alternative is a crafty way for McConnell to kill the so-called stimulus while making it look like the fault of Schumer and company, not the GOP. Some of his partisan colleagues up for reelection in 2022 may need the political cover his effort provides but, in all honesty, he should have stood his ground and just said “no.”

Mitch McConnell Trump stimulus checks Republicans twitter
Right-wing Republicans on Twitter are praising Senate Majority Leader Mitch McConnell of Kentucky over President Donald Trump after a McConnell introduced a Senate proposal which could deny Trump and Democrats an increase in COVID-19 stimulus checks intended for American adults economically harmed by the ongoing pandemic. In this September 30, 2020 photo, McConnell talks to reporters following the weekly Senate Republican policy luncheon in the Hart Senate Office Building in Washington, DC.CHIP SOMODEVILLA/GETTY

It’s not that the money would go to families that don’t need it. The economics of the distribution algorithm would allow families making several hundreds of thousands a year declared eligible to receive a check, perhaps for more than $2000 depending on marital status and number of dependents. They don’t need it but—as both Sen. Schumer and Speaker Pelosi have many constituents among the caviar-consuming, designer-ice-cream-eating, Louis Vuitton-carrying crowd who would qualify, it’s little surprise they’re on board. They probably also appreciate the optics associated with seeming like Santa Claus while McConnell comes across as Scrooge.

Except McConnell isn’t, at least not as far as the economics are concerned. A one-time payment of $2000 may help some families clear some debts but it won’t do anything to get the economy going. What we know from the available data is that the open states, most of them red states, are doing better than the mostly blue states where the lockdowns continue.

If the lockdowns aren’t doing much to mitigate the impact of COVID, if the disease is still mostly passed from person to person in home and family settings, and if most all the people who die from it would have shortly died from something else—all things much of the available data show are true—then the best stimulus the economy could have would be for the shuttered states to reopen so everyone could go back to work.

If stopping the checks means more people clamoring for a return to normalcy, then McConnell has done the nation a great service. Larry Summers, the liberal economist who served as Bill Clinton‘s treasury secretary and director of Barack Obama‘s National Economic Council has said: “There is no good economic argument” for universal checks. The economy is roaring back, in fits and starts, with third-quarter 2020 growth at a never-before-seen 33 percent, adjusted on an annualized basis. The checks Trump, Pelosi and Schumer want can’t improve on that. They can put our children and grandchildren deeper into debt than they already are.

McConnell should maintain his hard “no.” As Ronald Reagan said, “The best welfare program is a job” which, expanded out, means the best form of stimulus—and what we need right now—is to let the American people get back to work, not subsidize their continuing to stay home.


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