David Henderson is appalled at the Biden administration’s assault on economic freedom and prosperity. A slice: Arguably the most intrusive regulation the Biden administration proposes is the one on people’s accounts in financial institutions. USA Today recently corrected an InfoWars exaggeration of the plan. The InfoWars headline: “Biden’s Treasury Dept. Declares IRS Will Monitor Transactions of ALL U.S. Accounts Over 0.” USA Today pointed out two mistakes. First, the Treasury can’t make such a move without Congress’s authorization. Second, writes Ella Lee of USA Today, “[E]ven if the proposal is adopted banks would not provide access to individual transactions, just the total amount flowing in and out of an account annually.” The correction is important but is it supposed to be
Don Boudreaux considers the following as important: Books, Budget Issues, Debt and Deficits, Education, History, inflation, Legal Issues, Myths and Fallacies
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Arguably the most intrusive regulation the Biden administration proposes is the one on people’s accounts in financial institutions. USA Today recently corrected an InfoWars exaggeration of the plan. The InfoWars headline: “Biden’s Treasury Dept. Declares IRS Will Monitor Transactions of ALL U.S. Accounts Over $600.” USA Today pointed out two mistakes. First, the Treasury can’t make such a move without Congress’s authorization. Second, writes Ella Lee of USA Today, “[E]ven if the proposal is adopted banks would not provide access to individual transactions, just the total amount flowing in and out of an account annually.” The correction is important but is it supposed to be comforting? Democrats announced that they would raise the threshold from $600 to $10,000. But you need only have an average of $834 a month flowing out of your account to trigger IRS surveillance. So the IRS would know more about the majority of account holders than they do now.
Recently, Norah O’Donnell of CBS News asked Treasury Secretary Janet Yellen about the proposal. Yellen claimed that it was to catch wealthy people who are massively evading taxes. Yellen gave an example of someone who reports income of $10,000 but has $3 million flowing out of his checking account. Said Yellen: “That tells the IRS that’s an individual you might audit.” And this has exactly what to do with people whose flow out of their bank account is $10,000? Yellen was widely regarded as a first-rate economist. Surely, she’s still enough of an economist to know the difference between $10,000 and $3 million. Her sticking to her guns on the surveillance proposal suggests something more sinister: that she wants to go after, not the just the high-rolling tax cheats, but also, say, the gardener who gets away with paying a few hundred dollars less in taxes in a year.
When segregationist lawyer John S. Battle Jr. charged that tuition grants would expedite the integration of Virginia’s public-school system, he unintentionally validated the logic behind Milton Friedman’s arguments for school choice. Daniel Kuehn would have us wave away Battle’s commentary, however, declaring it “out of step with most segregationists” (“The Segregationist History of School Choice,” Letters, Oct. 22).
This assessment would have likely surprised James J. Kilpatrick, the arch-segregationist editor of the Richmond News Leader whom Mr. Kuehn enlists as a counterexample to my op-ed “School Choice’s Antiracist History” (Oct. 19). In March 1959, Kilpatrick used his newspaper to bring Battle’s arguments to statewide attention, declaring in a bombastic headline: “Private Schools Are Linked to ‘Engulfment’ by Negroes.”
The public school system weighs on parents. It burdens them not simply with poor teaching and discipline, but with political bias, hostility toward religion, and now even sexual and racial indoctrination. Schools often seek openly to shape the very identity of children. What can parents do about it?
“I don’t think parents should be telling schools what they should teach,” Terry McAuliffe, the Democratic nominee for governor of Virginia, said in a Sept. 28 debate. The National School Boards Association seems to agree: In a Sept. 29 letter to President Biden, its leaders asked for federal intervention to stop “domestic terrorism and hate crimes” against public school officials. Attorney General Merrick Garland obliged, issuing an Oct. 4 memo directing law-enforcement agents and prosecutors to develop “strategies for addressing threats against school administrators, board members, teachers, and staff.”
Education consists mostly in speech to and with children. Parents enjoy freedom of speech in educating their children, whether at home or through private schooling. That is the principle underlying Pierce, and it illuminates our current conundrum.
The public school system, by design, pressures parents to substitute government educational speech for their own. Public education is a benefit tied to an unconstitutional condition. Parents get subsidized education on the condition that they accept government educational speech in lieu of home or private schooling.
There is nothing unconstitutional about taxation in support of government speech. Thus taxpayers have no generic right against public-school messages they find objectionable.
But parents are in a different situation. They aren’t merely subsidizing speech they find objectionable. They are being pushed into accepting government speech for their children in place of their own. Government requires parents to educate their children and offers education free of charge. For most parents, the economic pressure to accept this educational speech in place of their own is nearly irresistible.
The government’s attraction to borrowing is hardly a mystery. If the politicians had to extract every dollar they wanted to spend directly from the taxpayers, they might have a revolt on their hands–a bad career move for sure. Borrowing tends to make people more tolerant of bigger government than they would have been otherwise. After all, much of it looks free. They might scrutinize spending programs more closely if they paid the full price out of pocket. Thus forbidding borrowing and related central-bank inflation would put a lid on spending. That’s why that program won’t fly.
As Jean-Baptiste Colbert, the finance minister under Louis XIV, notoriously put it, “The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing.” You can see the advantage to politicians if they can cut way down on the hissing by borrowing what they’d otherwise have to obtain by plucking. This is what the admired art of governing comes down to.
Of course the government’s ability to borrow depends crucially on its power to tax. Avoiding present taxes implies offsetting future taxes when interest or principal is due. (More borrowing can finance those payments, but eventually…) Who would lend to a “government” that could not tax its subjects? (No true government lacks the power to tax.) Let’s face it: the state without taxation does not have a promising business plan to present to investors. But the “legitimate” power to steal changes everything; it makes for comparatively safe investments for bond buyers, one that unfairly competes with private alternatives. (Legitimate in this case means “in the eyes of most people”; it’s a subjective, not an objective, feature.)
The parts of the egalitarian tradition that fundamentally misunderstood what prices do, why inflation happens, and the consequences of price controls are interesting and important history. I hope they stay just that: history and not guides to policy. Deirdre McCloskey has called economics the social science of the post-magical worldview. Still, pretty much everyone in the late 18th century was fully ensconced in flat-Earth versions of economic theory and economic history. We should no more trust their prescriptions of price controls to fight inflation than we should trust their medical contemporaries’ prescriptions of mercury or leeches to fight disease.