Wintery Knight

…integrating Christian faith and knowledge in the public square

Supply-side economist Larry Kudlow: marriage is pro-economic-growth

Here’s a Real Clear Politics editorial from one of the biggest supply-side economics boosters out there.

Excerpt:

The greatest economic challenge of our time is how to restore economic growth. Over the past dozen years, average real growth has slowed to 1.8 percent annually, under both Republican and Democratic presidents and congresses. It’s a bipartisan problem.

And it’s a new one. For the past 50 years or so, the American economy grew at just less than 3.5 percent per year. But we’re now experiencing one of the longest slow-growth periods in the past 100 years. Excluding the Great Depression, I bet it is the longest slow-growth period in a century.

There are any number of fiscal and monetary prescriptions for restoring economic growth. As a Reagan supply sider, I would recommend lower marginal tax rates, lighter regulations, limited government and a sound dollar.

But I want to add this to the list: marriage. I have come to believe that marriage is a key element of a stronger economy.

Like any good economist, he’s got the numbers to back it up, too:

Naomi Schaefer Riley writes that “children of married parents are more likely to graduate high school, less likely to go to jail and more likely to delay sexual activity. And of course, children of unmarried parents are more than five times as likely to live in poverty.”

Economic writer Robert Samuelson notes that single-parent families have exploded, that more than 40 percent of births now go to the unwed, and that the flight from marriage “may have subtracted from happiness.” Citing a study from Isabel Sawhill, he notes that some unwed mothers “will have multiple partners and subject their children ‘to a degree of relationship chaos and instability that is hard to grasp.'”

Heritage Foundation economist Stephen Moore writes “that marriage with a devoted husband and wife in the home is a far better social program than food stamps, Medicaid, public housing or even all of the combined.” Moore points to a Heritage study showing how welfare households are much more likely to have no one working at all, with social assistance becoming a substitute for work.

A recent report from the American Enterprise Institute and the Institute for Family Studies, authored by W. Bradford Wilcox and Robert Lerman, reveals that married men have higher average incomes, seem to be more productive at work and work more and earn more. Wilcox and Lerman write that 51 percent of the 1980-2000 decline in male employment is due to the drop in marriage rates, and is highest among unmarried men. They find that “differing employment rates among married and unmarried men aren’t simply due to education levels or race, either.”

They conclude: “Promoting the importance of marriage, looking for ways to reduce marriage penalties in current means-tested welfare programs and engaging leaders at every level to find ways to strengthen marriage in their communities, are other critical steps to take to restore a culture of marriage.”

I’ll only add this, as I did at the Coolidge Foundation dinner: While restoring economic growth may be the great challenge of our time, this goal will never be realized until we restore marriage.

In short, marriage is pro-growth. We can’t do without it.

In case you missed it, there was a nice new study linking marriage to economic growth. It was put out by the American Enterprise Institute, a fiscally conservative think tank. It’s getting to be that fiscal conservatives are more interested in social conservatism than the reverse. Now if only we could get pro-lifers and pro-natural-marriage people to come towards lower taxes, smaller government, less restrictive regulations and a stronger dollar. How about it, social conservatives? Can you you run your family better when government leaves you more money in your pocket? Fiscal conservatism and social conservatism go together like peanut butter and jelly.

By the way, if you’d like to read a remarkable booklet put out by the Heritage Foundation called “Indivisible”, click here. In it, you’ll find well-known social conservatives advocating for fiscal conservatism, and well-known fiscal conservatives advocating for social conservatism. The essays are short and easy to understand. They don’t try to prove everything, just one little point per essay. You’ll find lots of names you recognize in it, like Jennifer Roback Morse, Michele Bachmann, Paul Ryan and Jay Richards.

Filed under: Commentary, , , , , , , , ,

Harvard poll: majority of youth likely voters favor Republicans this election

I’m not sure if I really believe this Harvard Institute of Politics poll because young people seem to be so disinterested in moral issues, economics and national security these days. But I guess even young people know whether they have jobs, whether they like living with their parents and whether they want to have their heads chopped off. Right?

Right:

More than half – 51 percent – of America’s millennials who say they will “definitely be voting” in November prefer a Republican-run Congress, with only 47 percent favoring Democrat control, according to a Harvard Institute of Politics poll.

This marks a significant departure from the institute’s findings before the 2010 midterm elections, when America’s 18-29 year olds who were definitely voting favored Democrats 55 percent to 43 percent.

Institute director Maggie Williams described the youth vote as “politically up for grabs” and a potential “swing vote” for control of Congress in a conference call to announce the results.

“The message to political candidates is clear: Ignore millennial voters at your peril,” Williams said.

What’s more, the poll found that only 43 percent of millennials approve of President Obama’s job performance, while 53 percent disapprove. It is his second-lowest rating in the institute’s polls since he took office. The figures are only slightly worse for Obama among those who will “definitely be voting”: 42 percent approve, 56 percent disapprove.

The results showed a stark divide in presidential approval along racial and ethnic lines. Only three in 10 young whites approve of the president’s performance, while nearly eight in 10 young blacks approve. Hispanic youth approval fell to 49 percent, down from 60 percent just six months ago.

Director of Polling John Della Volpe described youth voters as “a little bit less Democratic” than during Obama’s first term, speaking on the conference call. Factoring in the voting likelihood of all millennials, more 18-29 year olds prefer a Democrat-controlled Congress than a Republican one (50 percent to 43 percent), Della Volpe said – but the age group has become less supportive of the party.

“A lot of it comes down to turnout,” Della Volpe said. “It seems that young Republicans are more likely to participate next week.”

And this, I really like:

The poll also surveyed voters about terrorism threats. More than six in 10 millennials say they are “a great deal” or “somewhat” worried about another terrorist attack, with young women (66 percent) more afraid than men (56 percent).

I guess my naive view of young, unmarried women is that they are all like the ones I see in my gym – watching the Bravo channel or game shows to see people with too much make say mean things to one another. But it turns out that they are actually concerned with the economy and national security, which is a very good thing. Welcome aboard, young ladies! It’s not a shame to have a fear of something if the fear is justified, and if you do something about it to make it go away.

And by the way, the men in the gym are just as bad about not paying attention to politics and the economy. The day of the terrorist attack in Ottawa, the men were all watching ESPN sports. Horrible! Even the muscle bound Christian guy changes the channel from Fox News to ESPN as soon as I leave. The only person who is responsible at all is the gay guy – he at least watches local news.

Filed under: News, , , , , , , ,

Hillary Clinton’s views on the economy, taxes and jobs

The video above explains Hillary Clinton’s views on how jobs get created. She doesn’t think that private companies create jobs.

Here’s the story from economist Stephen Moore writing at Investors Business Daily.

Excerpt:

Hillary Clinton is getting deservedly attacked for her imbecilic statement at a Democratic political gathering in Massachusetts on Friday about business and jobs.

“Don’t let anybody tell you that, ah, you know, it’s corporations and businesses that create jobs,” she preached, to loud applause. “You know that old theory, trickle-down economics. That has been tried, that has failed. It has failed rather spectacularly.”

It may not be too surprising that Hillary can’t connect the dots that it takes an employer to create an employee to create wages and salaries.

That’s how some 150 million Americans get paid every week. Ms. Clinton has made her millions in the cattle futures market, as a government employee and giving speeches for fees of $250,000 a pop. Nice work if you can get it. The rest of us mere mortals need a paycheck.

Hillary’s witless statement might be written off as campaign hyperbole, and some might think the Democratic front-runner for president simply got carried away speaking to her “progressive” base and didn’t really mean it. Sometimes Republicans get into the act, as when Mitt Romney’s GOP rivals attacked him in 2012 for being rich and a successful investor.

But the scary thing is she really DID mean it. Her sophomoric comment, alas, reflects a long-simmering ideologically driven war against business that has become a central platform of the modern-day Democratic party.

Her remarks were simply an extension of President Obama’s “you didn’t build that” statement denigrating businessmen and women who have created companies — large and small.

In the left mindset, economic output and jobs are achieved collectively and thanks to the beneficence of government, not because of the ambition, drive, vision, risk-taking and guts that it takes to start a new enterprise out of nothing.

So who creates jobs then? Well, if it’s not private sector businesses then the only thing left to create jobs is the government. She thinks government creates jobs. And the more government raises taxes, the more money government has to give people jobs.

But is that really how it has worked in the past?

Let’s see.

Consider this article by the Cato Institute, a libertarian think tank, which discusses how the Reagan tax cuts affected the unemployment rate.

Excerpt:

In 1980, President Carter and his supporters in the Congress and news media asked, “how can we afford” presidential candidate Ronald Reagan’s proposed tax cuts?

Mr. Reagan’s critics claimed the tax cuts would lead to more inflation and higher interest rates, while Mr. Reagan said tax cuts would lead to more economic growth and higher living standards. What happened? Inflation fell from 12.5 percent in 1980 to 3.9 percent in 1984, interest rates fell, and economic growth went from minus 0.2 percent in 1980 to plus 7.3 percent in 1984, and Mr. Reagan was re-elected in a landslide.

[…]Despite the fact that federal revenues have varied little (as a percentage of GDP) over the last 40 years, there has been an enormous variation in top tax rates. When Ronald Reagan took office, the top individual tax rate was 70 percent and by 1986 it was down to only 28 percent. All Americans received at least a 30 percent tax rate cut; yet federal tax revenues as a percent of GDP were almost unchanged during the Reagan presidency (from 18.9 percent in 1980 to 18.1 percent in 1988).

What did change, however, was the rate of economic growth, which was more than 50 percent higher for the seven years after the Reagan tax cuts compared with the previous seven years. This increase in economic growth, plus some reductions in tax credits and deductions, almost entirely offset the effect of the rate reductions. Rapid economic growth, unlike government spending programs, proved to be the most effective way to reduce unemployment and poverty, and create opportunity for the disadvantaged.

The Daily Signal describes the effects of the Bush tax cuts.

Excerpt:

President Bush signed the first wave of tax cuts in 2001, cutting rates and providing tax relief for families by, for example, doubling of the child tax credit to $1,000.

At Congress’ insistence, the tax relief was initially phased in over many years, so the economy continued to lose jobs. In 2003, realizing its error, Congress made the earlier tax relief effective immediately. Congress also lowered tax rates on capital gains and dividends to encourage business investment, which had been lagging.

It was the then that the economy turned around. Within months of enactment, job growth shot up, eventually creating 8.1 million jobs through 2007. Tax revenues also increased after the Bush tax cuts, due to economic growth.

In 2003, capital gains tax rates were reduced. Rather than expand by 36% as the Congressional Budget Office projected before the tax cut, capital gains revenues more than doubled to $103 billion.

The CBO incorrectly calculated that the post-March 2003 tax cuts would lower 2006 revenues by $75 billion. Revenues for 2006 came in $47 billion above the pre-tax cut baseline.

Here’s what else happened after the 2003 tax cuts lowered the rates on income, capital gains and dividend taxes:

  • GDP grew at an annual rate of just 1.7% in the six quarters before the 2003 tax cuts. In the six quarters following the tax cuts, the growth rate was 4.1%.
  • The S&P 500 dropped 18% in the six quarters before the 2003 tax cuts but increased by 32% over the next six quarters.
  • The economy lost 267,000 jobs in the six quarters before the 2003 tax cuts. In the next six quarters, it added 307,000 jobs, followed by 5 million jobs in the next seven quarters.

The timing of the lower tax rates coincides almost exactly with the stark acceleration in the economy. Nor was this experience unique. The famous Clinton economic boom began when Congress passed legislation cutting spending and cutting the capital gains tax rate.

So in the past, the trickle-down supply-side tax cuts that Hillary Clinton derided in her speech created lots of jobs. We have to do what is known to work.

Filed under: News, , , , , , , , , ,

Dennis Prager: why the left doesn’t care about bad economic news

This was posted last night on Investors Business Daily.

Excerpt:

Almost everywhere the left is in control — in California, for example — the economic news is awful. But this has no effect on the ruling Democrats, the Los Angeles Times editorial page, New York Times economics columnist Paul Krugman or others on the left.

There is one overriding philosophical reason and one political reason for this.

He lists a number of the economic problems in California – a state that is controlled top to bottom by Democrats.

Why doesn’t it bother Democrats that economies decline when they are in control?

He writes:

Why do these state-crushing economic statistics — nearly every one of which is the result of left-wing policies — have no effect on California’s Democrats, the Los Angeles Times editorial page, New York Times economics columnist Paul Krugman or almost anyone else on the left?

The answer is that they don’t care.

Yes, of course, as individuals with a heart, most people, right and left, care about people losing their jobs.

But in terms of what matters to the left and the policies they pursue, they don’t care. The left and the political party it controls do not care if their policies force companies to leave the state (or the country).

They don’t care about the coming high inflation caused by quantitative easing (printing money) — Krugman calls it the inflation obsession — or the job-depressing effects of high taxes or energy prices that hurt the middle class or compelling businesses to leave.

They don’t care because the left is not interested in prosperity; the left is interested in inequality and in the environment.

Furthermore, the worse the economic situation, the more voters are likely to vote Democrat. The worse the economic situation, the greater the number of people receiving government assistance; the greater the number of people receiving government assistance, the greater the number of people who will vote Democrat.

Therefore, both philosophically and politically, the left has no reason to be troubled by bad economic news. And it isn’t. It is troubled by inequality and carbon emissions.

He could have done the same analysis in Detroit, where Democrats govern unopposed by Republicans, and have for years.

The main problem of the left is “inequality”. If they put in place policies that make everyone earn minimum wage, regardless of what they do, that would be a great victory for them. If the price of prosperity is “economic inequality”, then so much the worse for prosperity. If you tax people who produce more value than a minimum wage worker so that they make the same as a minimum wage worker, you can forget about the kinds of businesses that produce cars, computers and appliances. People invent these things and start businesses in order to make a profit. That’s why they spend their savings and take the risk to start a business. But if everything they earn is taxed away, then we will have to do without new products and services. This is understood in the private sector, but not by the government, nor by the low-information voters who vote for bigger government.

We have to stop allowing the Left to pain themselves as saints because they talk about the poor. What they don’t like about the poor is the rich. If everyone were poor, they wouldn’t talk about the poor – because everyone would be equal. That’s their goal.

Filed under: Commentary, , , , , , , , ,

Canada surpasses USA to lead the world in median income after taxes

From the radically leftist New York Times, of all places.

Excerpt:

The American middle class, long the most affluent in the world, has lost that distinction.

While the wealthiest Americans are outpacing many of their global peers, a New York Times analysis shows that across the lower- and middle-income tiers, citizens of other advanced countries have received considerably larger raises over the last three decades.

After-tax middle-class incomes in Canada — substantially behind in 2000 — now appear to be higher than in the United States. The poor in much of Europe earn more than poor Americans.

The numbers, based on surveys conducted over the past 35 years, offer some of the most detailed publicly available comparisons for different income groups in different countries over time. They suggest that most American families are paying a steep price for high and rising income inequality.

Although economic growth in the United States continues to be as strong as in many other countries, or stronger, a small percentage of American households is fully benefiting from it. Median income in Canada pulled into a tie with median United States income in 2010 and has most likely surpassed it since then. Median incomes in Western European countries still trail those in the United States, but the gap in several — including Britain, the Netherlands and Sweden — is much smaller than it was a decade ago.

In European countries hit hardest by recent financial crises, such as Greece and Portugal, incomes have of course fallen sharply in recent years.

[…]The struggles of the poor in the United States are even starker than those of the middle class. A family at the 20th percentile of the income distribution in this country makes significantly less money than a similar family in Canada, Sweden, Norway, Finland or the Netherlands. Thirty-five years ago, the reverse was true.

Thanks Obama! Canada is doing very well with their conservative prime minister, but things are not so good down here.

Filed under: News, , , , , ,

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