Against Hillary: Fiscal Policy and Taxation

This is the fourth post in my series opposing Hillary Clinton’s candidacy. See the introduction in Part 1 here. Read my opposition to Trump here. Read why you should mathematically vote for a third party here.

Taxation

I won’t spend a huge amount of time on this section because there’s another fundamental ideological argument here, but I want to emphasize a few key points. One is that government taxation and spending is inherently distortionary in an economic sense. Therefore, we should be biased against government policies that transfer money unless we can definitively show the benefits are significantly larger than the costs. Relatedly, the tax code should be as simple and as non-distortionary as possible. Gary Johnson has a pretty good idea here on replacing the income tax with a similarly progressive consumption tax. Similar tax holes would likely be carved out over time, but throwing out the current system in favor of one that does not discourage income earning, but only spending, would have some clear benefits. This idea is popular among libertarians, progressives, and even Bill Gates. It is not a perfect plan, especially when taking into account transition costs, but the current tax code does not have much going for it: it’s complex and creates bad incentives everywhere. Needless to say, Donald Trump’s fiscal policy may not raise taxes, but excessive government borrowing can have big costs as well, and at some point in the future distortionary taxes will need to pay for all of Trump’s out of control spending ideas.

Spending

The second point is that if we assume luck is an inherent part of wealth, then using government as a form of social insurance is pretty reasonable, even from a libertarian standpoint. But most government spending is not focused on giving money to the poor. A huge chunk is spent on the elderly in the form of social security and medicare, even though many are solidly middle class. Taxes for the programs are also fairly regressive. Other major spending categories are overseas military operations, defense spending generally, veterans spending (which we will see more of if Hillary is elected), and interest on the national debt. Together these make up a lot more than 60% of the federal budget. And that’s not even going into the costs of the war on drugs, corporate subsidies, and so on, which are a bit harder to calculate, but are nonetheless real costs which are not remotely focused on helping the poor. The problem is that Hillary isn’t really talking about reforming these areas. If anything, she’s talked about expanding them and introducing new spending areas. Again, this isn’t even mentioning the unknown costs of her future foreign policy blunders.

Free college tuition is really the most egregious. We already live in a world where college graduates are forced to take jobs that they are overqualified for. The reason is partially because government already offers huge subsidies for college tuition; as a result, colleges have little price competition. They just increase the prices, and the state just keeps paying it. Increasing the amount of subsidies in order to fix a high price doesn’t work for tulips (seriously, read it), and it doesn’t work for college. Spending lots of money to educate someone on a subject that is not in demand, whether it’s a B.A. in psychology or skills in coding fortran, is very expensive to society. That cost should be born out by the person learning the skill with no market, not by society. Incentives would then push people to either learn skills that are in demand (so they can pay back the cost of education), or to forego college and begin earning immediately without huge upfront costs. Both of these would be better for society at large. Yes, we should help those with little wealth with government support, but those receiving help should ultimately decide what to do with additional funds that will best help them. The government should not interfere with the relative opportunity cost faced by prospective applicants to college. Reducing, not increasing college subsidies is the only way to control the rising cost of college and fix the overqualification and saturation of college degrees in the job marketplace.

Finally, paying for this with higher taxes on the wealthy is a bit wishful. Firstly, the arithmetic doesn’t quite add up; the New York Times estimates higher taxes would raise only $100 billion to $200 billion depending on how broad and steep the tax increases are. This isn’t enough to cover current annual payments on the national debt. It would likely cover public college tuition today, before additional cost growth and the large influx of students that free tuition would bring. There wouldn’t be much room for a new war in Syria or an expansion of social security. Secondly, federal tax revenues have basically never exceeded 20% of GDP. It’s not that higher taxes wouldn’t raise revenue; they just wouldn’t beyond a certain level. A Clinton presidency would not be as fiscally irresponsible as a Trump presidency, but it is a bit worrisome considering the returns of this spending seem to be to get middle class votes more than to help the poor.


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Picture Credit: Gage Skidmore, licensed under CC BY-SA-2.0

Narrow Your Gun Debates

On firearms, I’m open to robust gun ownership, but I’m not sold on anything. Like most of my positions, my default is to favor the ability of individuals to operate without restrictions, but I’m by no means a gun purist, to the dismay of many more intense libertarians I know. If there were more stringent regulations on firearms purchases, it wouldn’t be something I cared strongly about.

Nonetheless, many people do feel strongly about gun ownership in the United States, and I wonder if this is a position where efficient advocacy could help us understand whether those feelings are warranted. Unfortunately, gun ownership and gun control are complex issues with many different parts. Continue reading Narrow Your Gun Debates