Richard J Grant

Published in The Tennessean , Sunday, July 31, 2011 by Richard J. Grant In recent days, President Barack Obama has become quite fond of quoting his esteemed predecessor, President Ronald Reagan. We all know the dangers of quoting out of context and of misunderstanding quotes, but it is also rumored that Obama has been studying Reagan's career. Perhaps he came across this 1986 Reagan quote: “Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.” Given President Obama's record so far, it seems that he mistook this for advice. Superficially, the two men do have some similarities. Both share the same job title and both inherited very poorly performing economies. Both saw unemployment rise during their first two years in office. At no time during Reagan's two terms did Republicans control both houses of Congress. The Republicans never had a majority in the House ...

Published in The Tennessean , Sunday, July 24, 2011 by Richard J. Grant It is often said that business taxes, such as the corporate income tax, are simply passed on to consumers through higher prices. But it is not that simple. If companies could just raise prices to cover their higher costs, why didn't they just put their prices that high in the first place? When a company raises its prices, some customers stop buying and others cut back on the quantities that they purchase. This is especially true if competitors do not raise their prices. But even if all businesses are affected by rising tax rates, or any other cost, the company cannot assume that it can raise its prices without losing sales. This is why companies don't like taxes: it hurts them. It hurts their owners by reducing profits, and it hurts their customers because they pay more for less. Just because a company sets its price does not mean that customers will come forth with the predicted levels of spending. The sal...

Published in The Tennessean , Sunday, July 17, 2011 by Richard J. Grant Did President Barack Obama just admit that Social Security adds to the deficit? In an interview about the debt ceiling with CBS News last week, the president said, “I cannot guarantee that those checks go out on August 3rd if we haven't resolved this issue. Because there may simply not be the money in the coffers to do it.” Clearly it was not the president's intention to admit that Social Security payments are inextricably entwined with the federal budget. His intention was to score political advantage by scaring a politically active voting bloc, composed largely of seniors, into pressuring Republicans to raise the debt limit unconditionally. There never has been any chance that Social Security payments to current recipients would be missed or even reduced. Although Congress is not legally bound to continue such payments indefinitely, it has a strong political motivation to do so. Over the past 70 years, pe...

Published in The Tennessean , Sunday, July 10, 2011 by Richard J. Grant One reason that big government is associated with weak economies is its inability to consider adequately the costs of its actions. This is why the various “stimulus” packages have failed to achieve their stated goals. They did succeed in bailing-out particular companies and classes of investors, but the American economy has been slow to adjust and is showing signs of continued weakness. Big-spending governments can always point to big results. But these results look good only when some of the costs are ignored. When the federal government spent hundreds of billions of dollars specifically on “stimulus,” the burden on taxpayers and the private sector was greater than that. Taxpayers hand over the levied amount of dollars to the government, but they also bear the burden of tax-compliance costs and the adjustments to maximize after-tax profits. That is just fiscal policy – the effects of government spending, taxing, a...

Published in The Tennessean , Sunday, July 3, 2011 by Richard J. Grant About a year before the Declaration of Independence, Benjamin Franklin wrote the oft-quoted sentence, “They who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety.” Mr. Franklin and his colleagues famously lived up to the admonition implied in his words. But he was not confident that future Americans would consistently do so. When he emerged from the Constitutional Convention a dozen years later and offered his storied description of the result, “A republic, if you can keep it,” he was worried less about physical dangers than democratic dangers. It has become easy to believe that we can vote ourselves into financial security, but there is no substitute for work and saving. It is easy to believe that we can force people to save for their old age and to administer those savings through governmental programs even though we know that centrally planned economies are les...