Japan has announced that it will cut its corporate tax rate by five percentage points. Japan and the United States had been the global laggards on corporate tax reform, so this leaves America with the highest corporate rate among the 34 wealthy nations of the Organization for Economic Cooperation and Development.
It is little wonder that Congress’s current approval rating is at the lowest point (13 percent) in the 30+ years Gallup has been asking that question. Consider the 1,924 page, $1.1 trillion pork-laden omnibus appropriations bill that Senate Democrats (and some establishment Republicans) want to pass along with an additional $160 billion in “emergency” spending.
Economist Richard Vedder has written a piece for the Chronicle of Higher Education entitled “The Great College-Degree Scam.” Using data from the Bureau of Labor Statistics, Vedder found that “approximately 60 percent of the increase in the number of college graduates from 1992 to 2008 worked in jobs that the BLS considers relatively low skilled—occupations where many participants have only high school diplomas and often even less.”
A major shortcoming of the deficit reduction plan concocted by the president’s Fiscal Commission is that it assumed that the federal government should continue doing everything it currently does. For example, the plan proposed a 15 cent per gallon increase in the federal gasoline tax to fund infrastructure projects. But why not allow the private sector to play a greater role in financing and maintaining infrastructure like roads?
In 2006, Michigan Gov. Jennifer Granholm told citizens, “In five years, you’re going to be blown away by the strength and diversity of Michigan’s transformed economy.” When those words were uttered, Michigan’s unemployment rate was 6.7 percent. It’s now almost 13 percent.
House Republican leaders went with Rep. Hal Rogers (R-KY) – a.k.a. “The Prince of Pork” – to chair the House Appropriations Committee. As I wrote last week, the prospect of Rogers chairing appropriations is about as inspiring as re-heated meatloaf when it comes to his potential for pushing serious spending reforms.
A recent study by economists Alberto Alesina, Dorian Carloni, and Giampaolo Leece looked at 19 OECD countries from 1975 to 2008 and found no evidence that “governments which quickly reduce budget deficits are systematically voted out office.” Therefore, the authors conclude that governments can “decisively” reduce deficits and be returned to office by voters.
In-coming House Speaker John Boehner’s endorsement of Rep. Jeff Flake (R-AZ) for a seat on the chamber’s appropriations committee means that it’s probably a done deal. Flake is one of the few policymakers who actually live up to the fiscal conservative label. Thus, Flake’s appointment to a committee that many members think only exists to increase spending on special interests would be welcome news.
President Barack Obama’s National Commission on Fiscal Responsibility and Reform was given the seemingly impossible task of crafting a budgetary blueprint to head off the country’s looming debt crisis in a way both Democrats and Republicans could accept. The commission’s final report was therefore predictable — with elements Republicans and Democrats could both like and dislike.