Another Republican president expands the welfare state.
Baby bonds are a great idea for parents and their employers but not for taxpayers.
The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists. Ernest Hemingway
The government and its chiefs do not have the powers of a mythical Santa Claus. They cannot spend except by taking out of the pockets of some people for the benefit of others. Ludwig von Mises
MAKE AMERICANS FINANCIALLY INDEPENDENT
President Trump wants the federal government to fund an investment account for newborns with an initial deposit of $1,000 . The president held a roundtable at the White House yesterday with CEOs some of whom pledged matching the governments’s initial deposit expressing support for the so-called Trump accounts.
Here is another example of a good idea gone bad, and a reflection of the era we have been living in—the “age of the non sequitir.” In other words, people need (fill in the blank) therefore there should—must—be a federal program to meet those needs.
Are there any members of Congress and in the Trump administration who understand the rules of logic and will abide by Article I, Section 8 of the Constitution?
Federal government spending has increased markedly under both Democrats and Republicans for nearly 100 years. Every conceivable human need, from retirement income and medical care for seniors and low income individuals, food subsidies, housing subsidies, student loan subsidies, agriculture subsidies, corporate welfare, and the list goes on and on.
Below are examples of Republican presidents making individuals and families less financially independent and more dependent on taxpayers
Dwight D. Eisenhower: Created the cabinet department, Health, Education and Welfare, which eventually became HHS, Health and Human Services.
Richard Nixon: Signed the Supplemental Security Income (SSI) program and the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) into law in 1972.
Gerald Ford: Signed the Earned Income Tax Credit (EITC) program in 1975, which aims to help low-to-moderate income individuals and families.
George W. Bush: Expanded the Food Stamp Program (now SNAP) in the 2002 Farm Bill, particularly restoring eligibility for legal immigrants.
George H.W. Bush: Signed the Low Income Home Energy Assistance Program (LIHEAP) in 1980 and the Child Care Program in 1990.
In keeping with the theme of the need to create a constitutional federal budget, $1,000 grants to newborns are clearly unconstitutional no matter how noble an idea. In addition, wealthy families of newborns would be get a subsidy, too. The welfare state for all!
Why not just reduce taxes for everyone so parents and friends and family could fund these accounts? What a concept!
The welfare ideology is deeply embedded in the psyche of the American people. Ideas matter. As Ludwig von Mises stated: "The Welfare State is merely a method for transforming the market economy step-by-step into Socialism.”
Republicans are unwittingly taking the American people down the road to serfdom.
When I began teaching Corporate Finance 40 years ago at Ramapo College, one of the tools students learned was the time value of money. I distributed a future value table which showed the growth of $1,000 at a 8% annual return from birth into the future. (The stock market return has been approximately 9% per annum for the past 100 years, so I am calculating a slightly more conservative rate of return.)
At age 65, the account would have nearly $148,000. If an employer matched the $1,000 deposit, the account would from to nearly $300,000, and if friends and family chipped in another $1,000, the child at age 65 would have just $450,000!
If an additional $1,000 was deposited every year for the next 64 years, the account would grow to $2.14 million! In other words, savings will generate a multimillion nest age at age 65 with a modest annual investment. And at age 70, the account would have nearly $3.1 million!
As Warren Buffett famously wrote, compound returns yield great returns over the long term.
Parents should create baby accounts and funds could be added every year over a lifetime, giving newborns a financially independent retirement.
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Perry Atkinson and I recently discussed the unfolding economic events.
James Bovard on protectionism.
Recent interviews discussing the state of the economy with Perry Atkinson, Jim Peters, and Randy Durham.
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Dave Campbell and I discuss MAFI on the Clarity and Chaos podcast.
Col. Mike and Dr. Mike and I discuss Trump and his promises on the National Security Hour.
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Restoring free enterprise, medical freedom, and a constitutional federal budget.
The insufferable Jim Cramer reveals his economic ignorance in a recent CNBC rant.
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Tom DiLorenzo’s pamphlet, Axis of Evil, is now available at the Mises Institute.
Order a free copy of Rothbard’s money and banking classic monograph. Or, you can read it online here.
My December 10 talk on medical care.
Bob Murphy interviews Dr. Keith Smith of the Surgery Center of OK.
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Murray Sabrin, PhD, is emeritus professor of finance, Ramapo College of New Jersey. Dr. Sabrin is considered a “public intellectual” for writing about the economy in scholarly and popular publications. His book, The Finance of Health Care: Wellness and Innovative Approaches to Employee Medical Insurance (Business Expert Press, Oct. 24, 2022), and his other BEP publication, Navigating the Boom/Bust Cycle: An Entrepreneur’s Survival Guide (October 2021), provides decision makers with tools needed to help manage their businesses during the business cycle. Sabrin's autobiography, From Immigrant to Public Intellectual: An American Story, was published in November, 2022. He is also the author of Why the Federal Reserve Sucks.
MAFI A
The DC swamp needs more money. Bonds for bucks. Anyway..."the account would have nearly $3.1 million!"...and after 65 years of inflation? The account would be worth probably half that and what about taxes?
It is not that easy to save $3,000/year coming from three different sources. There are too many unknowns over 65 years...health issues, unforeseen expenses, divorces, more babies, employment issues and now A/i to think about. The stability factor would be about 5-10%.
Furthermore, this baby bond thing smacks right into the face of the HHS which is still sanctioning the use of mRNA poisons while many studies now prove that mRNA poisons are destroying the fertility of women and the baby making process as sperm density continues to decline.
The imbecility of the DC Swamp is inescapable. It is doing NOTHING to improve on the likelihood that the fertility rate will increase and couples will want to have babies. The democrats HATE newborns as they continue to push abortion and deadly vaccines.