In an op-ed in the Financial Times, former Clinton Treasury secretary Larry Summers claims that Trump’s tax plans favor the rich anIn an op-ed in the Financial Times, former Clinton Treasury secretary Larry Summers claims that Trump’s tax plans favor the rich and will hamper economic growth.d will hamper economic growth. Summers, a liberal economist, simply recycles the typical progressive rhetoric that any tax cut — ever — adds to the debt, favors the rich, and will fail to encourage economic growth. He’s wrong, and here’s why.

1. Congress determines tax policy, not the president

Summers’ attempt to demagogue the Trump tax plan and imbue fear into the populace is exaggerated. In fact, if tax reform happens, it’s unlikely to look exactly like the proposal offered by Trump. After all, the president doesn’t determine tax policy — Congress does.

For example, look back at the Bush tax cuts. By comparison, the proposed cuts were smaller and less aggressive than what Trump’s proposing. Yet Bush still wasn’t able to convince Congress to agree to the very tax reform plan he ran on during his campaign.

As the GOP nominee in 2000, Bush proposed reducing the top marginal tax rate from 39.6 percent to 33 percent. Bush also proposed offering the charitable tax deduction as a non-itemized deduction that would have allowed most low- and middle-income families to deduct charitable donations. (Charitable deductions are offered only to those who itemize their taxes, which is usually a tax decision that is utilized by upper- and middle-income families.)

Instead of lowering the top marginal rate to 33 percent, Congress lowered it to 35 percent, and it never passed the charitable deduction measure. Additionally, the tax cuts included provisions never offered by Bush on the campaign trail, including a reduction in capital gains and dividend taxes.

Summers knows that Trump’s tax plan is merely an ideological blueprint for Congress to follow — a mandate to implement a large tax cut. However, the exact provisions and the overall size of the tax cut must accommodate the wishes of Congress, too.

2. Tax cuts strengthen and grow the economy, not weaken it

Summers follows up with yet more typical, liberal talking points:

The proposals from the presidential campaign … will massively favour the top 1 percent of income earners, threaten an explosive rise in federal debt, complicate the tax code and do little if anything to spur growth.

There’s one big problem with this statement: It reeks of hypocrisy. Summers can complain all he wants about tax cuts, but that doesn’t change the fact that as President Obama’s economic adviser, Summers was responsible for facilitating a massive stimulus program in 2009, which included $211 billion in tax cuts.

Also, since when has a liberal worried about the debt? Summers oversaw Obama’s economic policies that added $9.3 trillion to the debt — more than the combined debts of the previous 43 presidents.

Furthermore, Summers’ narrative contradicts economic studies published by other mainstream liberal economists. For example, Obama’s first chief economic adviser, Dr. Christina Romer, published an academic paper, which found a positive correlation between tax cuts and “very large and persistent positive output effects.”

The prevailing view that people know how to allocate capital in an economy — i.e., handle their own money — better than the government is shared by more than just academics. In fact, the most famous Democrat of the 20th century, John F. Kennedy, was a constant champion of tax reductions to grow the economy.

Economist Larry Kudlow writes in RealClearPolitics.com, “Fifty-four years ago, at The Economic Club of New York, President John F. Kennedy unveiled a dramatic tax cut plan to revive the long-stagnant U.S. economy.” Quoting from Kennedy’s speech, “In short, it is a paradoxical truth that tax rates are too high today and tax revenues too low, and the soundest way to raise revenues in the long run is to cut rates now.”

As a result, the economy under Kennedy’s tax cuts grew by roughly five percent yearly for nearly eight years. That’s quite the contrast with tax-hike champion, Obama, whose economic growth has averaged 2.1 percent, the fourth lowest since World War II.

3. Upper-income households bear the largest tax burden, not the lower-middle class

Finally, there is the simple intellectual argument about who receives tax cuts. First, tax cut debates are often constructed with the entire tax code in mind. Yet, when Washington talks about tax reform, they are often only focused on one section of the tax code: income taxes.

After all, payroll taxes, which most people pay, provide a dedicated stream of revenue designated for very specific retirement benefits, like Social Security and Medicare. The amount paid in, which is associated with a person’s lifetime salary, is partially correlated to the benefits a person will receive in the future.

But there is little interest in Washington to manipulate the payroll tax. Instead, the debate over tax reform mostly deals with the individual income tax, as well as corporate tax.

Therefore, any tax cut combined with comprehensive tax reform will intrinsically benefit upper-income families. That’s because those individuals — making more than $265,000 per year — pay 88 percent of all federal income taxes. Yet individuals making less than $47,400 don’t pay any federal income tax. In fact, they have a negative tax liability, meaning after accounting for refundable tax credits and deductions, these individuals receive more from the government than they pay in income taxes.

Therefore, Summers knows that any tax cut will simply tax less from the people who make more than $70,000, or in other words, those who pay the bulk of the income taxes. After all, it’s hard to cut income taxes for those far below that average income level since they don’t pay much federal income tax to begin with. In fact, this point only re-enforces the need for tax reform — and tax cuts.

In total, the government is expected to raise $3.421 trillion in taxes in 2017. Of that amount, $1.667 trillion comes from the income tax — nearly 50 percent of all revenues. The individual income tax is the main source of revenue for funding the normal operations of government; the rest is dedicated to specific programs (except for corporate taxes, which are relatively small at $284 billion). Yet the burden of funding our democratic government is increasingly being pushed onto fewer and fewer people.

The message outlined by Summers is nothing new from a liberal ideologue. Summers’ rhetoric is not only misleading, but it is also antithetical to the more important debate. As he acknowledges in his piece, tax reforms:

[C]ould help offset the dramatic increases in inequality that have taken place over a generation, repair a business tax system that globalization has rendered dysfunctional, reduces uncertainty and promote growth.

But the debate must first start with proposals. Summers may not like Trump’s conservative, pro-limited government tax proposal, but the merits of Trump’s plan should be fairly and equally debated so that beneficial compromise or legitimate changes to the plan can materialize. But the skewed commentary in Summers’ op-ed is designed to stymie the discussion — a political vendetta to accomplish nothing but to deliver a loss to Trump and the American people.

The U.S. can’t wait any longer for tax reform; the evidence of the benefits offered are clear. Instead of scoring political points, Summers should join the conversation as an intellectual and help propel tax reform for all Americans. (For more from the author of “3 Reasons Why Larry Summers’ Misleading Attack on Trump’s Tax Plan Doesn’t Add Up” please click HERE)

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The reaction to Trump’s deal to keep 1,100 Carrier jobs in Indiana has ranged from outrage to adoration. There are so many layers to this Shakespearean drama that all points of views have some level of credence. I’m torn between the positive and negative aspects of this deal. If you’ve read Bastiat’s The Law and Hazlitt’s Economics in One Lesson, you understand the fallacies involved when government interferes in the free market. Politicians and their fanboys always concentrate on the seen aspects of government intervention, but purposely ignore the unseen consequences.

First, I wholeheartedly agree with Scott Adams’ assessment of Trump’s move as a brilliant, visible, memorable, newsworthy ploy to sway public opinion and sending a message to corporate America that he means business. Trump beat Carrier like a rented mule during the entire presidential campaign for announcing they were closing their plant in Indiana and moving the jobs to a new plant in Mexico. The publicity was so bad, I ended up getting a substantial rebate when I had a Carrier air conditioner installed in the Spring.

I’ve seen Trump worshipers trying to show what a fantastic economic deal this was for Indiana and the country. They are only looking at the scenario of staying versus leaving. The other scenario is what exists today versus what will exist tomorrow. Those 1,100 jobs already exist in Indiana. They are already paying taxes and spending money in Indiana. The taxpayers of Indiana currently have no obligation to Carrier or the employees of Carrier. With this new “fantastic” deal, the employees of Carrier are still employed, but now the the taxpayers of Indiana now have a $7 million obligation to Carrier.

This isn’t a zero sum game. The $7 million is taken from the pockets of taxpayers and will not be spent in the greater economy of Indiana. This deal is absolutely a net loss for Indiana versus where they were before the deal. The people of this country are hypocritical when it comes to keeping jobs in the U.S. They want cheap electronics, gadgets, appliances and air conditioners. Therefore, they have been buying cheap foreign made products by the trillions for the last couple decades.

Carrier was moving to Mexico for the low labor and regulatory costs. This would have allowed them to sell the air conditioners made in Mexico at a lower price than if they are made in Indiana. Therefore, the consumers of these products would have spent less money on the air conditioners, leaving excess funds to spend on other products. The purchasers of Carrier air conditioners are not benefiting from this deal. (Read more from “Carrier and the Slippery Slope” HERE)

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For the latest evidence of the price the American people have paid for a feckless Republican Congress, look no further than the impunity with which the Obama administration is acting in a direct rebuke to the American people on one of the core national security concerns of our time.

Or was one of the central themes of the presidential election that Barack Obama’s party just lost not the need to assert American sovereignty and our national interest first by at least pausing immigration from jihadist hotspots?

Alas, it is only fitting that the swan song of this administration reads as follows: “Bring us your tired, your poor, your unvetted refugees.”

The news to which I am referring comes from a Fox report that the U.S. State Department has classified details on a deal the Obama administration cut with Australia resulting in the resettlement of approximately 2,500 refugees to the U.S. from countries such as Iran, Afghanistan and Iraq, among other Islamic supremacist-majority nations — refugees rejected by the Australians themselves.

There is the usual outrage around this deal, including the fact that the president has never articulated why it is in America’s national interest to import refugees from Islamic supremacist nations at a time when Islamic supremacists tell us they wish to infiltrate by embedding among such peoples. And what about the fact that our FBI director said we were incapable of vetting such refugees? Likewise, the Obama administration has remained mum rather than demanding that other Islamic nations take responsibility for absorbing such refugees given similarity in culture, the relative logistical ease with which such actions could be taken, financial wherewithal. Fundamentally, the Obama administration continues to show compassion for non-Americans over and above those who elected him.

A theme I raised in a recent piece in opposition to the choice of Senate Foreign Relations Cmte Chair Bob Corker, R-Tenn. (F, 45%) for secretary of state in President-elect Trump’s administration recurs in this story well, further reflecting the damage Sen. Corker has wrought and why he ought not to reach Foggy Bottom.

In a letter on the matter addressed to DHS Secretary Jeh Johnson and Secretary of State John Kerry, Sen. Chuck Grassley, R-Iowa. (D, 66%) and Rep. Bob Goodlatte, R-Va. (D, 64%) wrote “This situation is concerning for many reasons,” continuing “your departments negotiated an international agreement regarding refugees without consulting or notifying Congress.”

The very Senate treaty ratification power that readers will recall Sen. Corker turned on its head in the Iran Deal, essentially conceding the Senate’s check on the president’s seminal disastrous piece of foreign policy, is what the president relied on to negotiate this secret agreement. This follows the president’s neglect of the senate with respect to the Comprehensive Test Ban Treaty.

What fear should a president have when Congress fails to adequately use its oversight powers, powers of the purse, advice and consent and impeachment powers in the face of a rampantly lawless agenda?

A President Donald Trump is going to have to clean up President Obama’s numerous messes, and at every turn face a Democratic minority that unlike Republicans in the Obama years will have no fear of using every parliamentary and political trick and maneuver to thwart policy they do not like and corrupt that which they cannot stop.

But he is also going to have to deal with a Republican Congress that has shown itself to be lacking in spine for the last eight years.

The reassertion of Congressional power during the Trump years will certainly be a welcome thing.

Let us hope however that it is not so one-sided as to allow President Obama’s most disastrous actions to substantially survive. (For more from the author of “From Refugees to the Iran Deal: Will Congress Get Its Act Together Under President Trump?” please click HERE)

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President-elect Donald Trump’s “Contract with the American Voter” pledges that “for every new federal regulation, two existing regulations must be eliminated.”

This should be celebrated by the majority of Americans who think the federal government does too much.

At the outset of this regulatory unwinding, one potential priority stands out above the others. The Trump administration should review the 300,000 or more federal regulations that carry criminal penalties with the goal of amending them to carry only noncriminal sanctions—or otherwise, repeal them altogether.

Over a century ago, the Supreme Court decided that Congress may set a criminal penalty “for violations of regulations to be made by an executive officer.” (United States v. Grimaud (1911)). Since then, writes former U.S. Attorney General Edwin Meese III, the “Congress has delegated to a host of federal agencies the power to define by regulation the elements of a broad range of different criminal laws.”

Today, these regulations number over 300,000. They are published in the bowels of the federal register—the place where few people outside of law firms and major corporations look to find laws—and are often drafted in ambiguous and often hyper-technical language that can’t be understood.

One might assume that if a regulation is serious enough for violators to be subject to criminal prosecution, it would be designed to prohibit conduct that is seriously harmful and morally condemnable. But this is often not the case.

For example, no one worries when they leave their house at night that a dog might bark at a squirrel. Most people don’t even pretend that they could prevent all dogs from barking. Yet it is a federal crime to allow a pet to make a noise that scares wildlife within a national park.

Nobody fears a local ice cream store might put a few too many drops of wine into a wine sorbet for sale. But that is also a federal crime punishable by up to one year in jail and fines of up to $1,000.

Consider John Sturgeon’s story as told by Heritage Foundation scholar Paul Larkin:

For more than 15 years, John Sturgeon used a hovercraft to reach moose-hunting grounds in Alaska without any incident or objection. Then, one day in 2007, two National Park Service rangers told Sturgeon that he was on federal property and hovercraft were illegal.

What followed this was almost a decade of costly litigation that concerned “federal criminal regulations no one knows (riding a hovercraft is prohibited) in places where no one lives (Alaskan backcountry).”

With little to no input from or accountability to voters, bureaucrats have run amok with the power to create new crimes.

One account on the Twitter social media platform titled “A Crime a Day” features plenty more federal criminal regulations that deserve scrutiny from any administration that is intent on reducing the size, scope, and power of the administrative state. These include:

Making it a crime to sell mixed nuts if the nuts pictured on the label aren’t in decreasing weight order (21 USC §333 & 21 CFR §164.110(f)).

Making it a federal crime to let small cigars leave the cigar factory unless they’re labeled “small” or “little” (26 USC §5762 & 27 CFR §41.73).

Making it a crime for amateur radio operators to sell amateur radio equipment, and using amateur radio too often (47 USC §502 & 47 CFR §97.113).

Making it a federal crime for the operator of a wharf to let his longshoremen use common drinking cups (33 USC §941(f) & 29 CFR §1918.95(b)(3)).

As these provisions convey, there are key differences between regulations and criminal statutes that must not be overlooked.

John Malcolm, director of The Heritage Foundation’s Edwin Meese III Center for Legal and Judicial Studies, has previously written:

Criminal laws are meant to enforce a commonly accepted moral code backed by the full force and authority of the government. Regulations, on the other hand, are meant to establish rules of the road in a variety of areas designed to curb excesses and to address consequences in a complex, rapidly evolving, highly industrialized society, with penalties attached for violations of those rules.

Allowing bureaucrats to enforce policy agendas with criminal penalties, and thus to create crimes that neither Congress nor the public likely ever imagined or intended, can have serious consequences. Malcolm continues:

While people often debate whether our society is overregulated, regardless of one’s views on that subject, it is important to recognize that there is a significant difference between regulations that carry civil or administrative penalties for violations and regulations that carry criminal penalties for violations. Individuals caught up in the latter may find themselves deprived of their liberty and stripped of their right to vote, to sit on a jury, and to possess a firearm, among other penalties that simply do not apply when someone violates a regulation that carries only civil or administrative penalties.

Experience shows that swift and certain civil sanctions are enough for agencies to deter and punish misconduct. In fact, even these are sometimes too severe.

Consider the example of Andy Johnson, a Wyoming welder. The Environmental Protection Agency fined him $16 million—$37,500 a day—for constructing a stock pond on his private 8-acre farm. Johnson described these penalties as “very threatening.”

Heritage scholars James Gattuso and Diane Katz report that the Obama administration “is responsible for an unparalleled expansion of the regulatory state, with the imposition of 229 major regulations since 2009 at a cost of $108 billion annually.”

Many regulations from previous administrations can and should be reviewed by a new administration seeking meaningful deregulation.

Yet “many of the worst effects” of overregulation, write Gattuso and Katz, such as “the loss of freedom and opportunity,” are greatest where violating an arcane regulation can be met with jail time, criminal fines, and all of the consequences that come with criminal prosecution and conviction.

So long as the Trump administration is looking for regulations to axe, officials in the Justice Department, federal agencies, and Congress should work together to strike as many regulatory crimes as possible. (For more from the author of “The Trump Administration Should Crack Down on Silly Rules That Carry Criminal Penalties” please click HERE)

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