So, you think it’s been a busy month in Washington, D.C. for the Taxpayers Protection Alliance (TPA)?  Well, TPA policy analyst Lindsey Stroud has been insanely busy at the state level testifying and submitting testimony on cigarette/vapor excise taxes and various vape flavor bans. Lindsey testified twice in North Dakota, twice in Maryland, once in New Hampshire, Connecticut, and Indiana, Minnesota and New Hampshire. She also submitted testimony Hawaii, Oklahoma, and Washington state. Minnesota limited testimony to a total of 20 minutes. They gave priority to Minnesota residents but she was the only national organization that testified. A major accomplishment. Congrats and a hat tip to the hard work being done by Lindsey.
 
Oink! – The Return of Earmarks?
 
One of the first issues I worked on when I first arrived in D.C. in 1993 was trying to eliminate pork-barrel earmarks. Republicans and Democrats were bellying up to the trough using taxpayer money to fund congressional earmarks to curry favor and try to get re-elected. Well, in 2011, after thousands of earmarks worth hundreds of billions of dollars were approved, Congress instituted an earmark moratorium. We thought that was the end of earmarks. Not so fast. Congress continued to earmark funds in defense spending bills. Now, according to Punchbowl News, Sen. Patrick Leahy (D-Vt.) and Rep. Rosa DeLauro (D-Ct.) have signaled their intention to bring back earmarks in full force for all spending bills.


 
To be clear, the earmarks we are talking about are projects that weren’t requested by an agency, but added by individual members of Congress. Earmarks are corrupt giveaways that unnecessarily burden American taxpayers. At their worst, earmarks have cost the American people more than $30 billion on an annual basis. Legislative votes should be won or lost on their merits, not on the basis of who can strong-arm the most money for pet projects in must-pass legislation. Simply put, earmarks are the closest thing to a legal bribe that exists in Washington. Some of the most egregious examples of earmarks include: $50 million for an indoor rain forest in Iowa; $500,000 for a teapot museum; and $100,000 for the Tiger Woods Foundation. Earmarks have been the bribery currency of Congress for many years, as both parties used them to buy votes. Former members of Congress including Randy ‘Duke’ Cunningham (R-Calif.) were sent to jail for accepting bribes to secure earmarks. Disgraced lobbyist Jack Abramoff also spent time in jail in connection with earmarks promised to clients. When earmarks are allowed, corruption and convictions soon follow.
 
The timing of this announcement is particularly bad as Congress is poised to pass a $1.9 trillion COVID relief bill and the congressional pigs will surely belly up to the trough. The 2010 moratorium stands as one of the few bright spots in government spending policy over the past decade. As former Senator Tom Coburn (R-Okla.) put it, earmarks are the ‘gateway drug to a spending addiction.’ Our nation must quit reckless spending cold turkey, not double down on taxpayer turkeys. Bringing back earmarks at a time of trillion dollar deficits and the debt surpassing $27 trillion is stupid and fiscally reckless.
 
Stop the GameStop Legislative Insanity
 
The hysteria over GameStop’s stock price and the ability of a group of trolls on Reddit to inflate its value has shown once again how Congress misreads a situation and overreacts with legislation. Policymakers in Washington are learning the wrong lessons from this affair and will cause more pain in the economy if these misconceptions turn to action. And, it looks like Sens. Elizabeth Warren (D-MA) and Bernie Sanders (I-VT) and Rep. Alexandria Ocasio-Cortez (D-NY) are taking the wrong message. As a result, they could end up hurting lower and middle income folks with unnecessary regulation and legislation. Traders on the Reddit message board r/WallStreetBets noticed that many in more traditional financial institutions were shorting GameStop’s stock—betting that it would soon fail. To counter this, WallStreetBets collectively agreed to buy up the stock to artificially drive up its price and punish the short selling hedge funds in the process. In roughly a week’s time, the stock’s value went from $39.12/share all the way up to $347.51/share. Hedge funds shorting the stock were feeling the squeeze, and redditors were reaping the benefits. This led to talks of bailouts and certain trading platforms – most notably Robinhood – halted trading of GameStop stock. This drew the ire of elected officials and regulators across the political spectrum. The populist narrative quickly became that the system was tying itself in knots to protect rich and powerful hedge funds at the expense of the average Joes on WallStreetBets. Calls for retributive action against hedge funds for this volatility grew louder. 

One may think hedge funds are good for the economy, one might think they are irredeemably evil – or likely somewhere in between those two extremes. However, it is near impossible to deny that the volatility in GameStop’s stock came from the folks on WallStreetBets and not the hedge funds themselves. It is also difficult to deny the fact that it is not only rich moguls who rely on hedge funds. Scores of retirees, like teachers, fire fighters, and police officers depend on hedge funds for retirement income, as do many public sector pensions. The reflex to punish hedge funds will cause just as much – if not more—pain on Main Street as it will on Wall Street. Taxes, regulations, and needless congressional hearings used to be something conservative Republicans stood against. Yet, Sens. Ted Cruz (R-TX) and Marsha Blackburn (R-TN) climbed aboard the regulatory hype train shortly after their progressive colleagues. Once again, these proposals might feel good in the moment, almost like a David vs. Goliath type of crusade. However, plenty of Davids will get caught up in the regulatory dragnet. A financial transactions tax would harm the nearly half of all Americans who invest money in the stock market, not just hedge funds. It would also devastate the aforementioned pension funds to the tune of billions of dollars. Further, regulations of the kind described by policymakers in light of the GameStop affair would hurt American competitiveness. Investment would be deterred away from American companies due to the costs associated with these taxes and regulations. It would become increasingly inefficient to invest in innovation in America at any type of scale. This could drive more and more entities out of our market and damage our financial system for years to come. 
 
Mindlessly pursuing short sellers and hedge funds for taxation and regulation will cause immense economic pain. Everyone loves a good underdog story and the perception that a group of internet trolls were taking on powerful Wall Street hedge funds and winning played well in the media. However, the narrative is rarely that simple. The stock market is far more complex and the heroes and villains are not nearly as black and white as politicians would have us believe. That is why it is important they resist the temptation to over-react. The so-called “solution” will be far worse than the supposed “problem” they are trying to solve.
 
 
BLOGS:
   

Monday:   Watchdog Slams Proposal to Resurrect Earmarks

Tuesday:   Op-Ed: Congress Must Account for Unused COVID Funds    

Wednesday: Op-Ed: Small business, The Dinner Club, Thrives Thanks to Facebook and Big Tech

Thursday:  Lawmakers Learned All the Wrong Lessons from GameStop Gambit   
 

MEDIA:
 
February 11, 2021: The Center Square ran TPA’s op-ed, “Maryland top-down school system flunks struggling students.”
 
February 11, 2021: WBFF- TV (Baltimore, Md) quoted TPA in its story, “City hopes payroll issues will be fixed by Feb. 19, will pay workers financially impacted.”
 
February 12, 2021:  The Livingston Parish News (Denham Springs, La.) ran TPA’s op-ed, “New 5G report predicts economic boom from next generation of wireless.”
 
February 15, 2021: The Berkley Independent (Summerville, S.C.) quoted TPA in their article, “Senator Scott Fights Job-Killing Artificial Minimum Wage Hike.”
 
February 15, 2021: WBFF (Fox, Baltimore) interviewed me about the new digital ad tax in Maryland.

February 15, 2021: VP of Policy Patrick Hedger appeared on Mornings on Maine Street on WDUN AM 550/102.9 FM (North Georgia) to discuss the minimum wage.
 
February 16, 2021: The Epoch Times quoted TPA in their article, “Red-District House Democrats Refuse to Talk About Huge H.R.1 that Federalizes Voter Registration and Elections.”
 
February 16, 2021: WBFF (Fox, Baltimore) quoted TPA in their article, “City weighs possible $57k salary increase for next DPW Director.”
 
February 17, 2021:  Townhall.com ran TPA’s op-ed, “Lawmakers Learned All the Wrong Lessons from GameStop Gambit.”

February 17, 2021: VP of Policy Patrick Hedger appeared on the Fred Holland Show (podcast) to discuss regulation of big tech on the state level. 
 
February 18, 2021:  I appeared on WBOB 600 AM (Jacksonville, Fla.) to talk about student loan bailouts and the $15/hour minimum wage proposal.
 
February 18, 2021:  WBFF (Fox, Baltimore) interviewed me about the $15/hour minimum wage proposal.

February 18, 2021:  Inside Sources ran TPA’s op-ed, “Biden Administration Must Pursue Regulatory Reform.”

 
February 18, 2021:  I appeared on KWTO 93.3 FM (Springfield, Mo.) to talk about unspent COVID relief funds.

Have a wonderful weekend and stay warm!

Best,

David Williams
President
Taxpayers Protection Alliance
1401 K Street, NW
Suite 502
Washington, D.C. xxxxxx
www.protectingtaxpayers.org