The recent record $1.6 billion Powerball lottery jackpot captured the nation’s attention. The sum is so immense, it’s hard for most of us to wrap our minds around. Another immense sum that’s hard for Americans to wrap their minds around is the amount of hardworking taxpayers’ money that the federal government spends on an annual and daily basis. In fiscal year 2015, the federal government spent $3,700 billion (or $3.7 trillion), which is more than $10 billion per day.
The Dodd-Frank Wall Street Reform and Consumer Protection Act has been generally associated with an explosion in federal financial regulatory restrictions. RegData permits us to specifically examine which agencies produced regulatory restrictions associated with the law. Dodd-Frank was associated with a substantial increase in the Federal Reserve’s role as a regulator, as its number of regulations jumped 32 percent in the 4 years since the passage of the legislation.
Recent research has shown that heavy regulation reduces entrepreneurship and employment opportunities and can divert investment from the most productive uses. The accumulation of regulation has also been associated with diminished labor productivity growth. On a macroeconomic scale, the buildup of regulation has slowed economic growth by an average of 2 percentage points, according to a study published in the Journal of Economic Growth. Policymakers should consider how existing regulations target certain industries more than others and whether heavy regulation of some industries is conveying enough benefits to justify the associated costs to the economy.
Low-quality analysis of new regulations results in the inefficient use of public resources to address society’s problems. The midnight rush makes it that much more difficult to separate the regulations with low-quality analysis and high costs.
The spending bill, which is more than 2,000 pages long, contains funding for numerous programs that largely benefit particular interest groups at the expense of taxpayers and the broader economy. This week’s holiday-themed graphic singles out 12 examples, but it by no means represents all of the gifts for special interests contained in the bill. Although the individual sums are not large relative to the overall spending contained in the bill, the examples highlight the problem with a federal government that faces few limits on how it can spend taxpayer money.
Americans have become increasingly aware of the detrimental role of cronyism—in their lives and the economy in general—where certain industries extract privileges from the federal government. That means that the federal sugar racket, which clearly benefits the few at the expense of many, should be a prime target of policymakers looking to chip away at “corporate welfare.”…
Each state in the United States has adopted some form of UVA policy, starting with Maryland in 1960, ending with Wisconsin in 1995. While this adoption of UVA policies was driven in part by concern among policymakers about urbanization and a desire to preserve farmland, a recent study also shows that the lobbying power of agricultural interests played a role in the spread of UVA tax policy.
Pfizer Inc. recently became the largest US firm to move to a lower-tax jurisdiction by combining with a foreign competitor. In this so-called “inversion,” Pfizer will merge with Allergan PLC, and the new headquarters will be located in Ireland. Inversions are a symptom the United States’ broken, outdated, and uncompetitive corporate tax system. The United States has the single highest corporate tax rate in the developed world—the US combined corporate tax rate is 39.1 percent. The chart below shows that US peer nations have systematically lowered their high corporate tax rates, while the United States’ rate has remained unchanged.
This week’s chart looks at total OCO funding from fiscal year (FY) 2001 to projected FY 2016, which amounts to a cumulative $1.75 trillion. Of that amount, 92 percent has gone to the Pentagon and the rest went to the State Department, US Agency for International Development, and the Department of Veterans Affairs.
The Bipartisan Budget Act of 2015, freshly signed into law by President Obama, suspends the $18.1 trillion federal debt ceiling until March 2017. It also busts the 2011 Budget Control Act—which I previously discussed—for the second time. It does so by raising the caps on discretionary funding by $50 billion for fiscal year (FY) 2016 and $30 billion for FY 2017.
Nate Silver, today’s most influential statistician and founder of the award-winning data website FiveThirtyEight, will join Tyler Cowen for a wide-ranging, intellectual dialogue as part of the Conversations with Tyler series.
History has shown that tax reforms seldom last when special interests have substantial incentives to lobby Congress for tax breaks. Making the tax code as simple—by taxing a broad base at the same low rate—and as transparent as possible will help reduce the ability and incentives to reverse future tax reforms.