Category archives: Economics

Increasing the Child Tax Credit: Good for Families, Good for the Economy

by Rob Schwarzwalder

June 30, 2015

Senators Marco Rubio (R-FL) and Mike Lee (R-UT) have introduced a pro-growth economic plan that includes an increase in the child care tax credit, and the Wall Street Journal isn’t happy about it. In fact, the normally prudent Journal even goes so far as to assert that the child tax credit “does nothing for economic growth.”

Oh, c’mon: Let’s assume that the money retained by families through an expanded credit, per Rubio-Lee, in fact does not foster immediate growth. This is a dubious argument. Personal income tax cuts spur growth just as do corporate income tax cuts.

However, let us agree, for the sake of argument, that the child tax credit is deficient in animating the kind of sustained growth serious people want for the economy. It has another, more profound benefit that the Journal ignores completely: It strengthens families. And strong families mean a stronger economy.

Productivity increases when an adequate number of people are employed using their skills, capacities, and know-how to provide quality and affordable goods and services. Development of these capacities comes heavily from personal formation within the family. As Nobel Prize-winning economist Gary Becker argued, healthy, educated, and emotionally stable children are essential to economic growth.

So, in targeting family formation through enabling mothers and fathers to better provide for their children and also to bear and raise more children, something demonstrably needed for the economy of the United States given our looming demographic deficit, the Rubio-Lee proposal would substantially abet growth in coming decades. Its facilitation of growth over time is an investment that will bear fruit in a steadily more robust economy.

The immediate costs of child-rearing are such that extra money to help families pay for the enhancement of their most fundamental “investments” – their boys and girls – is laudable.

Regrettably, the Journal has shown a considerable lack of economic common sense in attacking a proposal that would bolster our human capital capacity. FRC applauds Sens. Rubio and Lee for their foresight and justified consideration of family well-being.

Earlier in his career, Schwarzwalder was Director of Corporate Communications at the National Association of Manufacturers.

Does Obama’s Middle-Class Economics “Work”?

by Christina J. Daniels

February 19, 2015

In the 2015 State of the Union Address, President Barack Obama made the argument that middle-class economics “works.” He defined middle-class economics as, “the idea that this country does best when everyone gets their fair shot, everyone does their fair share, and everyone plays by the same set of rules.” But does middle-class economics “work?”

Historically, the idea of a fair chance combined with hard work is at the core of the American Dream. Opportunity, integrity, diligence and effort have combined to make America extraordinarily prosperous. Yet what does Mr. Obama mean by “fair share?”

Apparently he believes this share should include taking money from one segment of the population and transferring it to another – specifically, to those who wish to attend community college. It’s to this end that the President says he wants to make attending community college cost-free.

Yet education funded by redistribution cannot meet the requirements of the real-world job market. In 2009, Time Magazine equated a college degree to a driver’s license, due to its availability. CNN noted that “41% of college graduates from the last two years are stuck in jobs that don’t require a degree.” In March 2014, the liberal news source ThinkProgess also noted that “half a Million People with college degrees are working for (the) minimum wage.” The Huffington Post wrote an article giving seven reasons not to go to college and stated, “The people who sent us down the path of higher education clearly don’t understand basic economics and the law of supply and demand.” Currently, jobs that were once for low-skilled workers are crowded with college students.

According to the U.S. Department of Education, 19% of high school graduates cannot read, 14% of Americans cannot read and 21% of Americans read below a 5th grade level. By proposing policies such as free community college, the President is ignoring facts in favor of untenable proposals. As the Huffington Post notes, “The U.S. Illiteracy Rate Hasn’t changed in 10 Years:”

According to the Department of Justice, the link between academic failure and delinquency, violence, and crime is welded to reading failure.” The stats back up this claim: 85 percent of all juveniles who interface with the juvenile court system are functionally illiterate, and over 70 percent of inmates in America’s prisons cannot read above a fourth grade level.

In addition, Begin to Read compiled statistics showing, “two out of three children that do not learn to read by the fourth grade will end up in jail or on welfare”. The article further stated, “Penal institution records show that inmates have a 16% chance of returning to prison if they receive literacy help, as opposed to 70% who receive no help.” Illiteracy and prison rates plague the poor and are factors which, as Dr. Patrick Fagan of Marriage and Religion Research Institute documents, further heighten the problem of fatherlessness in America.

So, it’s clear that middle-class economics, as defined by the President, do not “work.” Providing free community college will further devalue education and hurt the poor. When disadvantaged individuals are locked out of society, they do not have a “fair shot,” they cannot do their “fair share,” and they are not playing by the “same set of rules.” To ensure that disadvantaged families have a “fair shot,” liberal politicians must address our nation’s illiteracy problem and its roots – fatherlessness and family breakdown. We should be focusing on helping children that fail kindergarten, families that are locked in multigenerational illiteracy and government dependency and college students struggling to read.

The use of school choice and reforming public housing policy are steps toward making change possible. Giving parents the freedom to choose the school and neighborhood they desire will help alleviate the negative impact of centralized poverty. In high poverty areas, schools and neighborhoods are disproportionately filled with single mothers and peers from less educated households.[i] As Star Parker from the Center for Urban Renewal and Education (CURE) states, we must “bust up” the “ghettos” that public schools and government housing have created. With education and housing choice, we can be sure that everyone is playing by the “same rules” and receives a “fair shot.”

And there is no substitute for a strong, two-parent family in which a mom and a dad get married, stay married, and worship weekly with their children. No community college can ever provide that kind of security, opportunity or love.

[i] Fram, M. S., J. E. Miller-Cribbs, and L. Van Horn. “Poverty, Race, and the Contexts of Achievement: Examining Educational Experiences of Children in the U.S. South.” Social Work 52, no. 4 (2007): 309-19.South

Congressmen Defend Federal Role in Blocking D.C. Marijuana Legalization

by Nick Frase

December 17, 2014

Representative Andy Harris (R-MD) has been blacklisted from a local Washington D.C. bike shop, at least according to the sign in their window reading “Andy Harris Not Welcome.” For those planning to visit who want to avoid a similar fate, the cautionary tale here is don’t expect to uphold federal marijuana laws in the District if you want to get your derailleur adjusted.

Earlier this month, Rep. Harris successfully attached bipartisan language to the omnibus spending deal designed to block enactment of a marijuana legalization initiative that the District passed in November. Pot activists have decried the action as an example of an outsider meddling in local affairs. “You don’t serve us, we don’t serve you” is the tagline to their blacklist sign, a reference to the fact that Rep. Harris’ district is in Maryland and not in D.C.

What’s going on, aren’t Republican’s for self-government and local control?

It’s a fair question to ask and one that Rep. Harris along with Rep. Joe Pitts (R-PA) have addressed in a Washington Post op-ed. I won’t attempt to repeat it here but the thrust of the argument is: yes, Republicans are the party of self-government and local control, but they’re also the party of the Constitution and respect for the rule of law.

Federal law is explicit, under the Controlled Substances Act it is unlawful to manufacture, distribute or possess marijuana. Furthermore, Article I, § 8, cl. 17I of the Constitution grants Congress the power to “exercise exclusive Legislation in all Cases whatsoever” over the District of Columbia. The charge that Congress is somehow treating the District unfairly or in a way they would not treat another city ignores the fact that the District is unlike any other city.

Every year, the Appropriations Committee, on which Rep. Harris sits, provides federal payments to the tune of $500,000,000 to the District of Columbia for the cost of judges, court personnel and defendant representation. They provide payments for programs in areas like education and security. The Department of Justice provides payment for federal attorneys to prosecute local crimes and house prisoners. Federal taxpayers do not fund similar activities in any other city.

As Reps. Harris and Pitts rightly point out in their op-ed, if marijuana laws aren’t confusing enough, nearly a quarter of the District is federal park land and is policed by 26 different enforcement agencies—places and personnel that would still answer to federal law, not D.C. legalization.

Congress has a direct responsibility over the District of Columbia. One that apparently gets you kicked out of bike shops.

To the business community: Religious freedom and you - perfect together

by Travis Weber

December 1, 2014

Writing at the Berkley Center’s Religious Freedom Project blog, Samuel Gregg explores the idea – and idea for which new evidence is consistently emerging – that religious freedom is good for business.

Gregg begins by noting historically that as certain religious groups have been marginalized in political life, they have turned their energies toward commerce – and prospered. In other cases, certain groups have been marginalized in their nation’s financial life – thus handicapping the economy. This isn’t good for growth, obviously. Gregg then focuses his attention on the more recently discovered correlation between economic growth and religious freedom:

[T]here is growing evidence that respect for religious freedom tends to correlate with greater economic and business development. One recent academic article, for instance, found (1) a positive relationship between global economic competitiveness and religious freedom, and (2) that religious restrictions and hostilities tended to be detrimental to economic growth.”

Moreover, other rights and freedoms are not entirely unaffected:

[T]he strongest interest that business has in being attentive to the religious freedom of individuals and groups is the fact that substantive infringements upon one form of freedom often have significant and negative implications for other expressions of human liberty. If, for instance, governments can substantially nullify religious liberty, then they are surely capable of repressing any other civil liberty. This included rights with particular economic significance, such as the right to economic initiative and creativity, property rights, and the freedom of businesses to organize themselves in ways they deem necessary to (1) make a profit and (2) treat employees in ways consistent with the owner’s religious beliefs.”

He concludes by noting that, nevertheless:

[M]ore work needs to be done in this area. Correlation is not causation. While there do seem to be significant correlations between restrictions on religious liberty and the economic freedom of individuals and corporate bodies, the case for causation requires further elaboration.”

But, businesses take note!

If … the various forms of liberty are as interdependent as they seem to be, business surely has at least a high degree of self-interest in seeing substantive conceptions of religious liberty and the rights and protections associated with religious freedom prevail.”

Businesses take note, indeed.

Recognizing Family Decline as a Driver for Income Inequality

by Chris Gacek

April 30, 2014

Income inequality has become a hot political topic recently, so I welcome a Wall Street Journal article by Robert Maranto and Michael Crouch. Maranto and Crouch express surprise that the current public and academic debate largely ignores a powerful factor driving income inequality: the rise of single-parent families during the past half-century. The article goes on to describe the indisputable advantages of two-parent families and concludes observing that there are no “quick fixes”:

Welfare reform beginning in the mid-1990s offered only modest marriage incentives and has been insufficient to change entrenched cultural practices. The change must come from long-term societal transformation on this subject, led by political, educational and entertainment elites, similar to the decades-long movements against racism, sexism — and smoking.

The Maranto-Crouch / WSJ article has received some positive notice in other media. On Monday evening Professor Maranto was interviewed by John Batchelor on WABC Radio. (Use this link and begin listening at 31:00 on the player’s counter.)

Maranto has a humorous bio indicating that he is a professor in the Department of Education Reform at the University of Arkansas where Mr. Crouch is a researcher. Apparently, the professor is highly adept at writing very boring books.

Amid Capital Folly, Some Good News from Washington

by Robert Morrison

October 4, 2013

One of our friends teaches at a government institution. When the sequester came, some of the professors and staff were furloughed. Our friend said he could work around the sequester because all of his classes are on one day. He could take his furlough day on another day of the week, he volunteered. He was told, in no uncertain terms, you will now rearrange your schedule to work through this. This has got to hurt. Cancel all your classes and take a furlough.

I’m reminded of the cynical view that H.L. Mencken took of democracy a hundred years ago. The man they called “The Sage of Baltimore” said democracy was the theory that the people should get what they want — and get it good and hard.

Such cynicism was clearly behind the decision to close down the National Mall at the time of the government shutdown. It is good to have knowledgeable guides from the Park Service to help interpret the monuments, to be sure, but many of us have led tours of the Mall ourselves and would be honored to pitch in. I know I will be happy to volunteer.

Closing the Mall was sparked by the same age-old tactic of entrenched bureaucrats called “Closing the Washington Monument.” That tactic says that whenever Congress fails to cough up as much dough as the bureaucrats want, they can respond by closing down the capital’s most popular tourist attraction. But now, of course, the Washington Monument is already closed. This is because of earthquake damage, not bureaucratic bloody-mindedness.

The White House, too, has been closed. President Obama’s administration made that decision for reasons that are hard to recall. We’re sure that his many guests and campaign donors will be able to access the historic halls of what Harry Truman called the People’s House.

My favorite tour guide for the National Mall was the man who starred in the first presidential inauguration to be held on the West Front of the Capitol. In Ronald Reagan’s First Inaugural Address, January 20, 1981, he pointed to the vast expanse and the impressive monuments laid out before him and showed the country and the world what being American means.

I’m told that tens of thousands of prayer meetings are being held on this day, and for that I’m deeply grateful. We are a nation under God, and I believe God intended for us to be free. It would be fitting and good, I think, if on each Inaugural Day in future years it should be declared a day of prayer.

This is the first time in our history that this ceremony has been held, as you’ve been told, on this West Front of the Capitol. Standing here, one faces a magnificent vista, opening up on this city’s special beauty and history. At the end of this open mall are those shrines to the giants on whose shoulders we stand.

Directly in front of me, the monument to a monumental man, George Washington, father of our country. A man of humility who came to greatness reluctantly. He led America out of revolutionary victory into infant nationhood. Off to one side, the stately memorial to Thomas Jefferson. The Declaration of Independence flames with his eloquence. And then, beyond the Reflecting Pool, the dignified columns of the Lincoln Memorial. Whoever would understand in his heart the meaning of America will find it in the life of Abraham Lincoln.

Hearing Washington thus described as a man of humility “who came to greatness reluctantly,” we are led to wonder how things have come to this sad day. We have been told that our current president is one who “hovers over the nations, like a sort of god.” (Newsweek editor Evan Thomas) He is, says presidential historian Michael Beschloss, the smartest man ever to occupy the White House. So how did we get in this mess?

With all the folly evident in Washington, D.C. these days, we can use some good news from George Washington. There’s at least one historic site is still open and welcoming Americans: George Washington’s home at Mount Vernon. This stately mansion is about twenty miles from downtown Washington and it’s one of the best investments you will ever make.

The estate is the property of The Mount Vernon Ladies Association of the Union. It’s been privately owned for its entire existence. Several years ago, a new $187 million Visitors Center was opened that houses theaters, exhibits, gift shops and dining. Most recently, Mount Vernonadded a new feature, the Fred W. Smith National Library for the Study of George Washington. Now, scholars will be able to access old and new materials on the life and influence of George Washington. The George Washington Library cost $106 million — all privately funded. Another great feature is George Washington’s own handsome leather-bound copy of the Constitution with the Bill of Rights. In the margins of this 222-year old document you can see Washington’s neat, handwritten notes on the powers and the duties of the President. This volume cost $9.8 million at auction and was purchased for Mount Vernon, again using all private funds.

Another piece of good news from Washington is the forthcoming (Oct. 23-26) Hillsdale Hostel conference on “The Character and Statesmanship of George Washington.” With lectures, discussions, and presentations, Hillsdale College’s Alan J. Kirby, Jr. Center for Constitutional Studies and Citizenship will work to inform and inspire attendees about the life and work of our first president. I’m planning to attend this event and to report on it.

In 2009, The New Yorker published a most interesting cover portrait for President Obama’s First Inauguration.

It remains my favorite portrait of Barack Obama. It reminds us of the great promise and the greater responsibility that rests on the shoulders of every man who has stood in the place George Washington stood. It shows us how Washington was and remains the model for what a President of the United States should be. For liberals and conservatives, it’s a sobering thought.

Adding Insult to Injury: The Latest Shoe to Drop in Today¿s College Scam

by Chris Gacek

September 12, 2013

It used to be that the quality of an American university or college degree spoke for itself.  An employer could evaluate one’s academic achievement by looking at a transcript and making a fair assessment.  Well, those days appear to be fading fast.  Decades of academic bureaucratic bloat, grade inflation, and dumbing down curricula have had such a profound effect that a standardized, online college exit exam is being introduced in the spring of 2014.  The 90-minute test, produced by the non-profit Council for Aid to Education, is called the Collegiate Learning Assessment Plus (CLA+), and its scores can be shared with employers.

This article and this letters column (“Dear Joyce”/ Joyce Lain Kennedy) from the Chicago Tribune provide good background information on the CLA+.  From these articles it becomes clear that “grade inflation” has destroyed the value of the college transcript.  Here is another interesting observation:

Additionally, some employers are rethinking the value of famous-name institutions.  Is a degree from Harvard or Stanford really worth multiple times that of a solid state university? That rethink is why the CLA+ could level the hiring field by valuing the individual over the institution.

Wow.  So, these bloated educational bureaucracies are producing wildly overpriced educations that may soon have to be validated by a $35 national test that assesses “analysis, problem solving, writing, quantitative reasoning and reading.”  Now that is adding insult to injury.

Food Stamps and Stewardship

by Family Research Council

August 23, 2013

In a few months there will once again be the usual chatter regarding the debt ceiling, fiscal cliffs, and heightened rhetoric as interest groups vie for Federal money. The debates often center around the dollars with little to no regard for the actual problems those dollars are supposed to solve.

Consider “food stamps” which now come in the form of a debit card. If one has a debate about whether or not the hungry should be fed, virtually all of us agree that they should. We may disagree on who is actually in need and how they should best receive aid, but we agree that they should be fed. Advocates for increasing federal spending on food aid will argue that the economy has caused many more people to be without jobs and that these people need help. If a policy maker even so much as mentions cutting a dime from such programs he will be immediately vilified by many as “uncompassionate” at best, or “evil” at worst.

My own experience argues for a cautious approach, and why we need to be able to have discussions that go beyond mere rhetoric.

At a previous job, our rear parking lot was near some woods that were often filled with homeless people. They frequently came to us for water and my colleagues and I spoke with many of them on a semi-regular basis. Some of them were genuinely needy, while others stated that they liked being homeless because they were free from responsibility. Many of them had cell phones; all were well-clothed.

Over time I noticed a significant number of them asking for one of my employees. When they asked for him, they did so usually with an appearance of deep concern and seemed to want to see him immediately. I soon discovered the sad reason for their urgency. My employee would take their food stamp debit cards and exchange them at something like a 50% rate for booze. In other words for a $200 card my employee would buy roughly $100 in alcohol for the homeless and then use the card to purchase groceries for himself or others. This system was very efficient and profitable for all parties involved. The homeless were able to continue their habit using government funds and my employee was able to make a 50% return on investment for his trouble.

You may think this kind of thing is rare or hard to do. It is not. This “ring” of fraud is operated largely in the open and there was very little that could be done to stop it. If I were a legislator and suggested there is waste and fraud in the food stamp program, I would be labeled as uncaring.

For the record, I believe strongly in giving to charity and regularly give a portion of my income away. But I also believe in responsibility and stewardship. God has called us to love our neighbors and give to the needy while at the same time wisely managing what he has given us.

It is a wonderful thing that Americans care for the poor, and Christians have a special duty to help them. However, we should not allow that care to cause us to be blind to systematic abuses that actually hurt those the system is intended to help. Love demands that we provide for those around us, but wisdom demands that we not give to those who wantonly throw away what we are entrusting to them. Good stewardship requires honesty and honesty requires us to admit that good intentions are not enough.