First, Ms vanden Heuvel walks on her own eggshells by mentioning small business. Small businesses that are successful grow to be medium-sized and large businesses, with their owners getting taxed along with the proverbial ‘top 1%’ of income earners, the ‘rich’ who supposedly don’t pay their fair share. So which is it, they’re virtuous when they’re broke and can’t get a loan, but evil and greedy if they succeed and earn profits?
If private credit markets are a choke point, it’s worth asking, what’s choking them? Could it be that the attitude and policies of the current regime – having the least combined private sector business experience in recent memory, if not longer, especially in the White House – are making entrepreneurs and bankers wonder if lending and borrowing is worth the risk? After all, even if the venture succeeds, or perhaps especially if it does, it becomes a target for micromanagement, taxation and expropriation.
“Federal loan guarantees” – here we go again. When the 800-pound gorilla in the room ‘guarantees’ a loan (promises he’ll make the taxpayers pay for it in the case of default), then the lender is at liberty to be slothful in due diligence; the underlying risk of the business venture, creditworthiness or good character of the borrower matter less and less to the banker, because he’s not acting as a banker anymore, just a pawn of politicians playing Santa Claus. Again, that’s how the financial crisis of 2008 and countless other crashes and recessions were sown; government-induced distortions of price and risk signals sweep failure under the rug until the rot infects the whole house.
Vanden Heuvel proposes to punish people for hoarding (that is, managing their own resources according to their own best self-interest and thereby embarrassing the regime). Leftists are hostile to private property, and if we don’t do with ours what they think we ought, then we’re going to be ‘visited’. We must appreciate her (inadvertent?) honesty, admitting that the 1-2% tax rate on hoarding is only INITIAL. Do we need reminding that that’s exactly how the income tax started?
Pause briefly to contemplate each of her phrases:
- “Mr. Pollin estimates…” (well that’s a confidence-builder!)
- “this combination could generate about three million new jobs” (where have we heard phrases like that before?)
- “if it succeeds” (what principles of economics suggest that it is likely to succeed?)
- “in pumping about $300 billion” (there’s been a lot of pumping, a hundred billion here, a hundred billion there, until we start talking about real money…)
- “into productive investments.” (What are those? Answer: something that private citizens, businessmen, entrepreneurs, investors and speculators do; not legislators, administrators and bureaucrats. And, the more productive, the more tax revenue paid by the rich-who-aren’t-paying-their-fair-share).
“This plan should get bipartisan support.” Why? What’s in it for Republicans? What’s in it for anybody?
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