Should We Reach Our Limit with the Debt Ceiling or with High Levels of Debt?

Since the pandemic began, the government went on a spending binge for so-called pandemic "relief." That spending is coming home to roost and the U.S. government reached the debt ceiling on January 19th. The U.S. Treasury has implemented extraordinary measures that are set to expire on June 5th. In the interim, Congress is at a standoff. 

The debt ceiling was created in 1917 by Congress to create a legal limit of how much debt the federal government can incur. As of January 2023, the U.S. government has incurred $31.4 trillion in debt. It has ran an average debt of $1 trillion every year since 2001. That is because Congress consistently spends more than it receives in taxes and other forms of revenue. To compensate for the rest, the U.S. government has to borrow. The debt ceiling is not about approving new spending, but rather about authorizing Congress to pay on previously enacted spending. As such, raising the debt ceiling has become routine procedure for Congress. Since 1960, Congress has raised the debt ceiling 78 times. You can read more about the debt ceiling from the bipartisan Committee for a Responsible Federal Budget (CRFB) here.

Given the number of times the debt ceiling has come into play, the debt ceiling looks more like a political football than a mechanism for financial discipline. Let's take a look at some Treasury data on the subject. In inflation-adjusted dollars, the U.S. debt has ballooned from $2.87 trillion in 1960 to $31.4 trillion. As for debt-to-GDP ratio, we went from 54 percent in 1960 to 124 percent in 2022.

Back to the political football, we seem to be at a moment of political intransigence. Biden does not want anything less than an unequivocal increase of the debt limit without a quid pro quo. The Republicans in the House are willing to increase the debt ceiling provided there are spending cuts. What happens if we do not increase the limit? 

For one, we would need to gather $14 trillion either in spending cuts or tax increases to cover the difference. This amount is not quite double what the Department of Defense typically spends on an annual average. If the U.S. government cannot come up with the difference, it will have to default. If it has to default, the increase in interest rates would most probably make for larger spending cuts and tax increases, not to mention disincentivize investment in the United States. This would also affect other markets since over half of foreign currency reserves are held in U.S. dollars. 

If the possibility of default is real and terrifying, what good does the debt ceiling do? For one, it can help bring debt issues to the attention of Congress and help Congress revisit policies that are driving the debt. We are in debt because Congress has a habit of spending more than it has. Congress is rarely going to change course unless pressured to do so, which is what the debt ceiling does. As the Right-leaning Manhattan Institute points out, every major deficit reduction negotiation between 1985 and 2011 was prompted by the debt ceiling. 

The bipartisan CRFB suggests that the ideal solution would be to lift the debt ceiling as soon as possible while placing in measures to better ensure a more stable fiscal trajectory. I am inclined to agree with that statement, as do 63 percent of Americans, according to a January 2023 Harvard/Harris poll. There are considerable risks if we do not raise the debt limit and if we decide to default. I also do not want the United States to become another Argentina where we have to constantly make painful decisions about the budget and face enormously high interest rates. 

That might seem like an exaggeration to compare the United States' fiscal position to Argentina, but look at where we are right now. We have reached enormously high numbers with no signs of slowing down the debt-to-GDP ratio. Conditions will not get better as Social Security and Medicare trust funds are set to expire, nothing to say of increased political polarization. 

If Congress had fiscal discipline, the debt ceiling would act as a checkpoint to be mindful and reflective of federal spending, as well as provide an opportunity to adjust as necessary. Alas, we do not live in such times. I could be snide and say that the days of fiscal discipline from either party are behind us and we are irreparably screwed. But I would rather think that there is some hoping in staving off the United States having as dire of a budgetary status as Argentina. 

As the libertarian Cato Institute brings up, this requires cutting spending. Cato Institute suggests creating a fiscal plan, reforming the major drivers of the federal budget (i.e., Social Security, Medicare, and Medicaid), and restoring the earmark ban. The bipartisan CRFB also suggests having the debate on the debt limit when Congress is making the decisions on spending levels, and not after. Another helpful suggestion from the CRFB is to tie the debt ceiling to the debt held by the public instead of what we do now with gross federal debt.

Congress is going to make tough choices now or even tougher choices down the road. I know that it is politically anathema to say we need to focus on real reform, especially when it comes to federal spending. One of the basic tenets of economics is that we live in a world of scarcity. There only exist a finite amount of resources, and we should find the best way to allocate those resources. It also means that Congress should stop acting as if money grows on trees because it does not. I know high levels of government spending are not new, but the pandemic brought it to a new level. Look at Biden's American Rescue Plan Act (ARPA). ARPA was supposed to create new jobs. While it did not create jobs. it was a major contributor to inflation. As of September 2022, the Biden Administration added nearly $5 trillion to the deficit. This profligate spending is not only unsustainable, but it is harmful in the long-run.

As I brought up in December 2020, we need to care more about debt than ever increased public debt makes it harder to save money, creates more obstacles to comfortably retiring, and stymies economic growth, all of which lower our quality of life. I do not want to live in a world of paying higher taxes in the future because Congress could not get its act together now. I would prefer to live in a country that is an economic powerhouse in no small part because Congress created a plan to manage the federal debt. Congress needs to act like the future of this country depends on getting debt under control because truth be told, it does.

San Francisco Reveals the Ridiculousness of Reparations for Slavery

Earlier this month, a committee in San Francisco submitted a 60-page proposal to the City for a one-time reparations payment of $5 million to each eligible African-American resident. While the authors of the proposal acknowledge that San Francisco or California played no part in slavery, they decide to extend the eligibility for reparations beyond being a descendant of someone who was enslaved. Such eligibility requirements include having been incarcerated by the War on Drugs, being a descendant of someone impacted by redlining, or was affected by San Francisco's Urban Renewal between 1954 and 1973.  

Let's start with the price tag of this proposal. Given the broad eligibility requirements, it would not be unreasonable to say that the vast majority of San Francisco's estimated 35,455 African-American citizens over 18 years of age would qualify. Giving $5 million to each African-American in San Francisco would make a price tag of $175 billion. The price tag of the proposed reparations is more than ten times the amount of the City's current budget of $14 billion. As a Hoover Institution analysis on San Francisco's reparation proposal points out, this does not even factor in the other proposed recommendations that would add an additional $25 billion to the price tag. 

The proposal points out some historical wrongs. It should go without saying that slavery is an atrocious crime against liberty and humanity. Redlining was a harmful housing policy started by the Democratic Franklin D. Roosevelt's administration during the New Deal era that exacerbated racial wealth gaps. I have taken issue with the War on Drugs because it created a bloated corrections system incarcerating thousands of Americans while doing next to nothing to lower drug consumption. As for the Urban Renewal, I do not have an issue with improving housing. It is worth pointing out that liberals at the time were in support of the Urban Renewal. 

Where I take issue is with reparations being the solution. I first wrote about reparations in 2014 when I tackled the ethical, economic, and logistical issues with reparations. I will bring up some of those issues up here today, but I want to address the argument for reparations by asking some questions and show how implementation of reparations is nigh impossible. 

Who qualifies for reparations? 

If anyone should receive reparations for slavery, it would be those directly impacted by slavery. At least with Holocaust survivors and the Japanese-Americans who had to endure internment camps, the restitution was primarily made to those who went through the atrocities. It has been over 150 years since this country had a Civil War and slavery ended in the United States. All of those directly impacted by slavery are dead. What should be the percentage of Black ancestry required to receive reparations? Do mixed-race individuals qualify? Should wealthy and successful Black San Franciscans receive reparations? What about recent Black immigrants from Africa or the West Indies? But this avoids a bigger question: Why should people so far removed from slavery be held accountable for the damage caused by slavery? 

When does it end? 

If this were only about slavery, that would be one thing. However, the San Francisco proposal goes beyond slavery, as does author Ta-Nehisi Coates and countless others who bring up the topic of systemic racism. If reparations were only about slavery, the San Francisco proposal would not make any sense because California never partook in the Atlantic slave trade. 

The San Francisco proposal states that these reparations should exist because the "repression and exclusion of Black people were codified through legal and extralegal actions, social codes, and judicial enforcement." Here is the issue with that argument that is widely held by the pro-reparations crowd: Black people were not the only Americans screwed over by the government in such a fashion. 

There were the Chinese who felt a lot of discrimination through the Oriental Exclusion Acts and coolie labor (苦力), particularly in California. Do you hear a call from Chinese-Americans to receive millions in reparations? There were Japanese-Americans who were interred during World War II. Let's not forget the Jews, the Irish, Native Americans, and gay people. This is not to minimize what African-Americans have historically endured in a U.S. historical context. At the same time, it is equally true that there is no shortage of individuals that could claim harm by U.S. government policies or judicial enforcement.

And that is only looking at U.S. history. If we look at world history, injustice is all too common. By this standard, there is no country or government prior to the 21st century that would be able to withstand woke scrutiny. The brutality that countless had to endure over time would make nearly everyone eligible for reparations of some sort. It would be a nonstop litany of grievance politics. Again, when does it end?

Why aren't reparations proponents asking other countries for reparations?  

The United States was not the only country involved in the Atlantic slave trade. There were the European nations of Portugal, Britain, Spain, France, the Netherlands, and Denmark. Multiple African nations have ancestors who played their part, including Benin, Egypt, Morocco, and Cameroon. Slavery was not a uniquely American institution. Slavery existed prior to the Atlantic slave trade; it has been an institution since antiquity. Sadly, it still exists. So why aren't the woke citizens of San Francisco issuing a compensation claim to the nations that kidnapped, detained, and sold people into slavery?

Who is ultimately going to pay for this? 

In the San Francisco proposal, they are asking for an amount that shadows the City's annual budget, as well as the $22.5 billion deficit that the state of California already has. On a national level, we have over $31 trillion in debt and a debt-to-GDP ratio that is higher than it was shortly after World War II. The question of who is going to pay goes beyond the price tag or the solvency issues. San Francisco's population is 51.1 percent White and 37.2 percent Asian (Census). Nationwide demographics are different, but the distribution remains the same: the money would go from non-Black citizens to Black citizens. This brings up some uncomfortable questions to better understand the nuance. 

Should Caucasian-Americans whose ancestors fought for the Union be exempt from paying? What about white people whose ancestors were not even in the United States prior to the Civil War? I can tell you that about three-quarters of my ancestors didn’t immigrate to the United States until the 20th century. What about Black people whose ancestors fought for the Confederacy or were descended from slave traders in Africa? And why should Hispanics, Asians, and Native Americans pay for reparations? Was the suffering of their ancestors not enough to merit reparations? These may sound like absurd questions, but that is because refuting an absurd system as reparations requires replying to the absurdity. 

This highlights another issue with this proposal: collective justice. For the social justice crowd on the Left, reparations are fair because they believe in collective guilt, i.e., everyone should be judged the same for being part of a certain demographic, regardless of their individual involvement. For the rest of us, guilt and innocence should be determined on an individual level. By this collective guilt "logic," all Muslims would be responsible for 9-11. All gun owners would be held responsible for mass shootings. All straight people would be responsible for the oppression and stigma of gay people. But we know that such logic does not withstand scrutiny. All non-Black citizens of the United States should not be held responsible for slavery that ended nearly sixteen decades ago. Oversimplifying white people and their lack of involvement in a slave trade that has not occurred for well over a century is not only racist, but it illustrates the intellectual inconsistency of reparations proponents. 

These points get at another issue of trying to give out reparations generations after the incident has occurred. When you go back this many generations, the genealogical answers to who has standing become less straight-forward and more muddled, thereby diminishing the argument for reparations. 

Would reparations help heal or ease racial tensions?

If we look at 2022 Pew Research poll results for reparations specifically, we have a mixed picture. 68 percent of Americans do not approve of reparations. Race demographics is where it gets tricky. 77 percent of African-Americans approve, whereas 18 percent of white people do. There is more approval from Hispanics and Asians than Caucasian-Americans (39 and 33 percent, respectively). As we can see, there is a racial divide on the question of reparations. Per the infographic below, there is an even bigger divide by political affiliation. 

I thought that reparations would do nothing to help race relations back in 2014. Since then, we have had more political polarization and social media amplifying societal contentiousness. Given these poll results and political contention in 2023 America, it is not difficult to foresee the political battles, social disruption, and further racial tensions that such a policy would most likely engender. And the bigger the payout, the bigger the resentment. As former Manhattan Institute fellow Coleman Hughes stated:

If we were to pay reparations today, we would only divide the country further - making it harder to build the political coalitions required to solve the problems facing black people today. We would insult many black Americans by putting a price on the suffering of their ancestors, and turn the relationship between black Americans and white Americans from a coalition into a transaction, from a union between citizens into a lawsuit between plaintiffs and defendants. 

Would reparations disincentivize work? 

That depends on how the reparations are distributed. If the funds are distributed as an income stream, then they would. As we see with unemployment benefits, the larger the benefit, the larger the disincentive. If they are distributed as a lump sum, as is the case with the San Francisco proposal, it would most probably take predatory practices to a whole new level. If payments were made to institutions, it makes me wonder how the funds would be distributed and who would hold the institutions accountable.

Would African-Americans have been better off if there ancestors were not sold into slavery?

This question was brought up by Cato Institute scholar Douglas Bandow. This a controversial question, but it points out a major flaw in the reparations argument. Slavery is an abhorrent practice. There is no moral justification for it. We should not forget the legal or economic progress that minorities in the United States have made, as much as reparation proponents would like to do. We should also ask what would have most likely happened if the slavery did not occur. To quote Bandow:

The U.S., for all its flaws, provides far more economic opportunities than the African nations where those seeking compensation would have ended up if their ancestors had not been transported to the New World. That doesn't justify the crime of slavery, of course, but it vitiates any claim for 'compensation' of the descendants of slaves.

Conclusion

Slavery was and is a despicable infringement of human rights. The treatment of African-Americans following the Civil War was no less excusable. At the same time, reparations are nothing more than a massive redistributionist scheme that does nothing to bring about justice while giving the political Left more money and power. To spend so much money to so little effect is fiscally irresponsible as it is morally egregious. 

When discussing redlining last month, I listed some policy ideas that did not involve costing billions and further dividing the nation. Although I disagreed with Senator Corey Booker's baby bonds plan, it at least avoided the racial tensions that come with reparations. We should be able to talk about tough issues on the topic of race, but we should equally discard such counterproductive measures as reparations.

Labor Shortages and Declining Work Ethic: Why the U.S. Needs More Immigrants

They took our jobs.

This line from the comedy South Park is symbolic of the anti-immigration side for a number of years now. What this side has argued is known as displacement theory. The theory hypothesizes that the inflow of cheaper immigrant labor pushes low-skilled, native-born workers out of the labor market. If that supply were cut off or severely limited, this would raise wages to give low-skilled, native-born workers a chance. The pandemic created a number of peculiar, atypical economic conditions. One of those anomalies was the de facto border closure in 2020-21 that was triggered by the pandemic. As University of California-Davis economics professor Giovani Peri shows, the United States has taken in 1.7 million fewer immigrants than would have come at the pre-2020 trend.     

In 2020, I showed how the displacement theory did not play out in reality. In case that were not sufficient, the pandemic provided us with a natural experiment to further disprove the notion. There were fewer immigrants entering the United States during the pandemic than beforehand. Yet the United States has an official unemployment rate of 3.5 percent and yet there are 10 million unfilled positions. As this piece from the Nisaknen Center illustrates, this labor shortage is affecting multiple industries.  

The labor shortage is certainly a perplexing one. About a year ago, I was trying to wrap my head around why there was a labor shortage. My responses ranged from unemployment benefits and the pandemic to lack of childcare and "The Great Resignation." There are multiple facets that have changed, whether that is schools reopening, higher vaccination rates, more people getting reacclimatized to a pre-pandemic normal, or the expiration of the additional unemployment benefits that were allocated. 

Wages have been rising, but workers are not getting back to work. The labor force participation rate is at 62.3 percent, which is an entire percentage point lower than it was before the pandemic (Federal Reserve).

Why are workers not getting back to work? There has been much ink spilled on why the labor force participation rate has been on the decline. The Census Bureau pins it on retiring Boomers. Some economists think it is due to shifting marriage patterns (e.g., Binder and Bound, 2019). The Richmond Federal Bank adds a decline in male educational attainment, increased substance abuse, and video games to the list. The libertarian Reason Magazine provides an interesting theory: Americans are losing their work ethic. This is in part illustrated by the fact that the U.S. labor force participation rate is bad enough where OECD data show that is has fallen below OECD average (see below). 

If declining work ethic is indeed at play, there is not a quick fix to regain a prioritization of people working hard. Nevertheless, the U.S. government can do something to do it. It can let up on the pandemic-era immigration restrictions and let more immigrants in. As the Kansas City Federal Bank shows in its May 2022 report on the topic, reduced immigration has exacerbated labor shortages. The subsequent wage pressure to attract workers unsurprisingly increases inflation. This report posits that immigration could help increase labor force participation. Given the positive effects that immigration has historically had on labor markets, that would not surprise me. Bureau of Labor Statistics data show that foreign-born Americans have a higher labor force participation (also see below). By removing visa caps, allowing for more immigrants into this country, and address the immigrant backlog, we can help make a significant dent in the labor shortage and get our economy back on track. 

Why Gas Stove Bans Should Go Up in Smoke

Having a background in political science and public policy, I have learned that anything can be politicized: pronouns, baby formula, art, face masks. Especially in an age with such high political polarization, the most seemingly innocuous item can become an item of political discourse. What got politicized last week? Gas stoves. Richard Trumka Jr., who is a commissioner for the Consumer Product Safety Commission, said that gas stoves are a hidden hazard. Trumka went as far as telling media outlet Bloomberg that "any option is on the table" when it comes to gas stoves. He proceeded to say that "Products that can't be safe can be banned." It caused a political firestorm, especially among conservative media that thought that the Biden administration was coming after everyone's gas stoves. The political contention got heated enough where Trumka had to announce that the CPSC has no intention of banning gas stoves.  

While the federal government claims no intention of bans, there have been local bans in Left-leaning jurisdictions. The state of California has banned gas stoves in multiple municipalities. The state of New York is banning the installation of new natural gas lines. And even if the government is not going after already-existing gas stoves, not allowing for the production or installation of new gas stoves is still a ban. The question I would like to ask today is whether a ban on gas stoves, whether it is only new gas stoves or on all gas stoves, makes sense.

Health Considerations 

The main premise of Trumka's statement was that gas stoves increase likelihood of childhood asthma. This was based on a study released last month finding that about one in eight cases of childhood asthma in the United States is linked to gas stoves (Gruenwald et al., 2022). This finding seems to line up with a meta-analysis showing increased risk of childhood asthma from gas stoves (Lin et al., 2013). The U.S. Environmental Protection Agency and the World Health Organization linked air pollutants from gas stoves to respiratory issues. Nevertheless, there is doubt to believe whether gas stoves cause statistically significant respiratory harm. 

The International Study of Asthma and Allergies in Childhood still is the most comprehensive study to date on the topic. This robust study of 47 countries concluded that there was "no evidence of an association between the use of gas as a cooking fuel and either asthma symptoms or asthma diagnosis" (Wong et al., 2013). If that was not enough, the U.S. Environmental Protection Agency states that "gas stoves (and gas fireplace inserts) do not require EPA certification. Whether designed to burn natural gas or propane, they burn very cleanly, emitting very little pollution." While there is plausibility in the release of nitrogen oxides from gas stoves causing respiratory issues, the Left-leaning Slate expresses skepticism that gas stoves play a major role in asthma or other respiratory issues. 

Effects on Climate Change

There is a secondary claim that we should convert from gas stoves to electric stoves because of its effects on greenhouse gas emissions, with methane in particular. Let's sidestep the fact that climate change is not an imminent threat. Let's assume for a moment that it is imminent. The net effects of greenhouse gas emissions would depend on where the electricity is coming from. As of November 2022, the Energy Information Administration found that 38.4 percent of electricity in the United States comes from natural gas, 21.9 percent from coal, 18.9 percent from nuclear, 9.2 percent from wind, 6.1 percent from hydropower, and 2.8 percent from solar. 

Right now, 60.3 percent comes from natural gas and coal, both of which emit at least some carbon into the atmosphere. Nuclear is a carbon-free option, which environmentalists tend to dislike. Renewables account for 19.8 percent. Given the current composition of source of electricity in the U.S., the net effects on greenhouse gas emissions are not in favor of a ban. But let's choose California as a counterexample. Yes, they have a higher percentage of electricity coming from renewables, but rolling blackouts are common in California. European countries are experiencing an electricity crunch in light of the Russo-Ukrainian War. Whether electric stoves would help or whether it is desirable to rely on electric grids more is a matter of debate  

Economic Impacts of a Gas Stove Ban 

An estimated 38 percent of homes have gas stoves, which is about 40 million stoves. How much would it cost to remove and replace gas stoves? I will use data from the Porch Group, which is a vertical software company specializing in home improvement and repairs. There is the cost of removing the gas stove and the gas line. There is the cost of the purchase of an electric stove, as well as the installation of that stove. The national average for labor and materials cost is $1,500, whereas the average cost for a new cooktop is another $1,337. Multiplying $2,837 by 40 million stoves amounts to $113.48 billion. 

Keep in mind that this back-of-the-envelope calculation only includes residential areas. Gas stoves are even more widely used in restaurants. According to the National Restaurant Association, 76 percent of restaurants use natural gas. Converting to electric stoves would have an impact on multiple restaurants, especially Chinese and Korean cuisine. Not only would that mean added costs for a restaurant to comply with a ban. In the best of times, restaurants run on thin profit margins. Many are still financially recovering from the pandemic and the lockdowns that harmed the restaurant industry. The cost of replacing a gas stove would set many restaurants back, thereby hobbling the economic progress of the food services industry.

Which Stoves Are Better for Cooking: Gas, Electric, or Induction?  

There is a reason why gas stoves are so widely used: because they are effective. Gas stoves heat up quickly, are easier to control, have greater usability with varied cookware, are easy to clean, offer more space, and have lower maintenance costs. Electric stoves take a long time to heat up and cook unevenly. A 2021 Morning Consult poll showed that 55 percent of people would likely consider a gas stove as their next stove. The major reason cited by survey respondents holding out on going electric is because they have used electric stoves and they do not work as well. 

There is the possibility of induction cooktops: "Induction cooking uses electricity to produce a magnetic field that induces currents in atoms the cooking vessel." In spite of being faster to heat up than electric ovens and having easier clean-up, induction ovens nevertheless require various types of cookware and are more expensive to purchase. We should not understate the importance of quality food in our lives. Food is an essential in life. Not only can it be a way to live healthily, but quality food is a way millions over time and across cultures enjoy life.

Conclusion

If the technology behind induction stoves gets better and cheapens over time or we come up with an even more efficient type of cooktop, that's one thing. That would be an example of market forces encouraging a trend instead of government mandate trying to force the change. But we are not there yet when it comes to the technological progress. Gas stoves are considered a superior option by many chefs and cooks. It is also likely that we reach a moment where most of our electricity comes from carbon-neutral sources. I have stated before that natural gas is a medium-term solution and that we would eventually need to shift more to nuclear power and renewables because fossil fuels will not last forever. But again, we are not there yet.

We should ask if a gas stove ban makes for good policy based on the merits of the argument. Whether we are talking about COVID lockdowns, menthol cigarettes, marijuana, refugees, human organs, trans fats, or plastic straws, bans are almost always blunt economic instruments with negative unintended consequences. The only exception I can recall writing about all these years was a partial smoking ban (keyword being "partial" because of its targeted nature). At the same time, an exception does not contradict the norm that bans are by and large harmful. 

Since gas stove bans are so new and there are no data available on economic impact of gas stove bans, I bring up bans on other consumer goods as a proxy for what the effects could be like. But let's come back to gas stoves specifically. There are serious doubts as to whether a gas stove ban would significantly improve respiratory health or reduce greenhouse gas emissions. It is clearer that a gas stove ban would have considerable economic costs and affect the quality of food. As such, there is no reasonable justification based on available data or the economics of bans that a gas stove ban would be a net benefit to society.

Rather than have a government bureaucrat intervene in consumer choices, here's a thought: individuals can gather information and make informed choices based on their own risk tolerance. We should be able to choose what sort of stove we want and whether to purchase a ventilator over the stove or simply open a window to improve ventilation in our homes. Treating adult consumers like actual adults. What a novel concept in our time!

The Woke Left Controlling Language Will Not Put Itself on the Right Side of History

I don't know if you have noticed or not, but the English language has been undergoing a lot of changes in the past five or so years. These changes are due to the puritans of our time: the woke Left. Mothers have become "birthing people." Affirmative action is now "diversity." Disinformation has become wokespeak for "speech I disagree with," which has a similar vibe to the phrase "threat to democracy." Infrastructure went from "roads and buildings" to "anything the Left deems essential for the government to spend tax dollars on." There are more examples that I will provide below, but it begs the question of what is happening and why. To quote the American Institute for Economic Research:

Wokesters quickly grab the moral high ground and ruthlessly denounce any deviation from the neo-orthodoxy du jour. Social media provides a conduit for quickly detecting tough and lifestyle infractions, shaming deviants into compliance or having them 'cancelled.'

This shift to gain the moral high ground is seen in a number of instances. We went from a fight for equality (i.e., equal treatment under the law) to one of equity (i.e., attempting to correct past discrimination with present discrimination, often to the point of "equality of results"). While inclusion has meant "everyone is welcome," it has an additional woke meaning of "a space that restricts speech to cater to those who are offended." Then there is anti-racism. Forget that almost no one is pro-racist. We used to fight for a colorblind society, but that is now deemed racist. And if you disagree, that is considered racist. Don't pay any heed to the fact that the obsession over race in the anti-racist world is its own form of racism. 

I want to point out a couple of notable examples from recent months to accentuate the woke Left's attempt to control language. Let's start with a list from Stanford University's Elimination of Harmful Language Initiative (EHLI) created this May. The Wall Street Journal discovered the list in December and had a field day with it. Here are a few good suggestions from the list:

• Calling it a "blind review" insinuates that blindness is abnormal and negative, furthering an ableist culture. Similarly, calling it obsessive compulsive disorder (OCD) is insulting, which is why EHLI suggests calling it detail-oriented. Way to minimize OCD!
• "Burying the hatchet" is considered cultural appropriation, as is the word guru. 
• Calling someone brave is an insult to the Indigenous people.
• Using such words as freshman, congressman, gentlemen, or chairman perpetuates gender binary language. 
• Instead of using Hispanic, EHLI suggests using the condescending, linguistically inaccurate, and exclusive term Latinx. 
• Calling it a white paper denotes that "white = good," which is why you should call it a position paper.
• "Beat a dead horse" perpetuates violence against animals. 
• Survivor is a good substitute for "victim" because it gives agency, but it's not good enough for Stanford. 
• It is bad enough that woke institutions try to thrust the usage of preferred gender pronouns onto the rest of us. In an attempt to out-woke everyone else, EHLI now says that calling the pronouns "preferred" is bad because it suggests that being gender nonbinary is a choice and a preference.

This list reads like a parody from the satirical site Babylon Bee. Yet these examples are coming from a well-known university being serious about linguistic shifts. A person with normal sensibilities would look at the list and dismiss most, if not all of it, as ridiculous. It is not only Stanford University making these sorts of modifications to the English language. The Centers for Disease Control and Prevention (CDC) has put itself in charge of administering woke language in the health sector by releasing Preferred Terms for Select Population Groups and Communities. 

Calling someone a smoker is considered offensive, so the CDC thinks you should use the term "person who smokes." Forget the fact that the CDC has trademarked the phrase "Tips From Former Smokers®." The CDC being incapable of taking its own advice is another reason I cannot take the CDC seriously. Calling someone an addict is deemed incorrect by the CDC. The CDC thinks "criminal" should be replaced by "person who is incarcerated or detained." Out of all the things a criminal in jail is going to worry about, do you think being called a criminal is at the top of that person's list? 

Yes, there are some truly offensive words out there. There needs to be a balance between being a society of sociopaths and being a bunch of snowflakes who have not developed the basic emotional resilience to handle words that are not considered offensive by the vast majority of people. The woke Left is incapable of striking such a balance. 

The woke Left's obsession over language is less about offensiveness because they do not care about offending anyone who disagrees with the woke in-group. Odds are that changing language is not going to address real issues because the legitimate problems facing us (and not micro-aggressions) entail solutions that go much deeper than making words less offensive for the least stoic and emotionally resilient in society, i.e., the woke. One of the main functions of language is to clearly communicate ideas, but all wokeness has done is muddy up and bastardize language for political purposes. Wokeness, or what was formerly referred to as political correctness, is thought and speech control in the guise of brotherhood (sorry, I mean all humans getting along in a harmonious fashion). To quote the Right-leaning The Federalist:

The obsession with over-complicating language is not incidental and has in fact been a consistent and identifiable strategy to muddy theaters of political discourse and frame discussions in a way that benefits the Left from the outset of the conversation.  

The woke Left's strategy is "control the language, control the conversation and how stories are told." Confucius once said that "when words lose their meaning, people lose their freedom." The ability to express oneself is an essential part of freedom. It is no accident that freedom of speech is in the First Amendment. It is also no accident that the woke Left is trying to control speech: because they want us to conform to their way of thinking. The only way to deal with the woke Left's Orwellian doublespeak is to speak up and fight back. As I brought up in October 2021, we should not be encouraging fragility or victimhood. We need emotional resilience and anti-fragility in our society. We also have to call out the woke B.S. and create institutions that counter the wokeness. 

As British magazine Spiked pointed out, "Society tends to oscillate between periods of liberalism and puritanism or conservatism. We are currently living through a puritan age. Soon will come a reaction, a swing once more towards liberalism....The people of the future will probably damn the generation of 2023 for its suffocating, moralizing, Philistine culture of censorship and its desire to wipe out the past." That shift cannot come soon enough. Much like with the ridiculous barrage of ineffective and harmful COVID restrictions, I anticipate that future generations will look at the woke attempts to mess with language with the same disdain and ridicule that it rightly deserves. 

How Is the Tax Cuts and Jobs Act Faring at Five Years?

Coming into the calendar year of 2023, one would think that tax reform would be furthest from my mind. There is the rampant inflation, the rising crime, a health care system that is in shambles from the pandemic and lockdowns. Yet that is what is on my mind at the moment. This week is the five-year anniversary that the Tax Cuts and Jobs Act (TCJA) was enacted. Not only was the TCJA the most noteworthy piece of legislation that the Republicans passed when they last controlled Congress, but the TCJA was also the most significant tax reform the United States has seen since the Tax Reform Act of 1986. 

I took a look at the TCJA five years ago shortly after it passed Congress. Approaching the one-year anniversary of the TCJA, I illustrated how the effects of the TCJA were a mixed bag. I also covered the state and local tax (SALT) deduction, which I thought was an improvement over the previous status quo of no limit on the deduction. I wanted to see what research was conducted in 2021 and 2022 to give a clearer picture on its effects at the five-year mark.

Corporate tax reform. One of the aspects that I liked most about the TCJA is with regards to the corporate tax. It lowered the statutory corporate tax rate from 35 percent to 21 percent. Prior to the TCJA, the United States had one of the highest corporate tax rates in the developed world. As I have pointed out, the corporate tax is one of the least efficient and most harmful taxes out there. To see the rate be lowered was a blessing unto itself. The Left-leaning Tax Policy Center looked at how corporate tax reform affected foreign direct investment [FDI]  (Matheson et al., 2022). This research had the following main findings showing how the TCJA encouraged foreign-owned companies to invest in the United States:

• On average, retained earnings rose about 0.5 percent in response to each percentage-point fall in the effective marginal tax rates.
• Investment in property, plant, and equipment [PPE] also rose following the TCJA tax cut, but less strongly. On average, about 0.35 percent for each percentage point decline in the EMTR....which was weekend when macroeconomic controls were introduced. 
• TCJA tax cuts thus appear to have spurred investment in tangible assets mainly through their stimulative effective on aggregate demand. 

The libertarian Cato Institute illustrated another benefit: increased corporate tax revenues. Why were revenues up more than government economists predicted? Because there was less tax evasion and higher economic activity in response. However, to be fair, the Tax Policy Center argues that it was the strong economy that fueled the corporate tax receipts. As a reminder, the Tax Policy Center did argue (see above) that corporate tax reform in the TCJA improved the economy. Furthermore, as the Right-leaning Tax Foundation points out, any temporary loss in federal tax revenue was more than compensated for by increased corporate investment. 

Individual income tax cuts. As the Congressional Budget Office shows with its data (also see the IRS' Statistics of Income data), the TCJA reduced the income tax rate for most taxpayers. How did this play out? The Federal Reserve Bank of Dallas found that an income tax cut equaling 1 percent of the GDP led to a 1.3 percentage point faster job growth and nearly 1.5 percentage points higher GDP growth (Kumar, 2022). The impacts were strongest felt in the first year of the TCJA and dropped in subsequent years. The author posited two reasons why the impacts were not as pronounced. One is that tax cuts are not as potent in an economic boom. The second is that 70 percent of those in the lowest quintile did not receive a tax cut since many in that quintile pay little to nothing in federal income tax. 

Charitable Giving. Some were hoping that maintaining a high deduction for charitable giving with a combination of the SALT deduction would have resulted in more charitable giving. A report from the Right-leaning American Enterprise Institute found that the TCJA reduced charitable giving (Husock, 2022). AEI's conclusion was that the government would need to create additional tax incentives for further charitable giving. The Right-leaning Heritage Foundation disagrees with AEI and found that there was increased charitable giving between 2017 and 2019.

Other business tax changes. The Right-leaning Tax Foundation released a November 2022 report on business tax changes from the TCJA that will start to phase out in 2023. The major provision for business taxes aside from corporate tax reform was a 100 percent bonus depreciation. This provision allowed for businesses to "deduct the full cost of most short-life business investments, such as equipment and machinery, substantially lower the cost of investing in the United States." The Tax Foundation subsequently estimated that keeping this depreciation permanent, along with canceling R&D amortization and retaining current law international tax rates, would increase long-term economic output by 0.6 percent.

Postscript. The University of North Carolina has some more research here, but I will end by saying I was hoping for some more research on the topic. After all, the TCJA had major impact on tax policy. At the same time, part of me is not surprised. Second, tax reform can require a decade or more before taking into full effect. The effects might be more minimal since many of the TCJA provisions are temporary. Third, it is likely that the effects of the TCJA are being masked or distorted by the pandemic and lockdowns. It does seem like the TCJA has done more good than harm. As I pointed out in early 2018, reducing taxes is not helpful if not accompanied by a significant decline in government spending. The problem is that the Biden administration has approved $4.8 trillion in new government borrowing. Until the government can get its spending under control, legislation such as the TCJA will not live to its full potential.