President Biden released his proposed budget for fiscal year (FY) 2024 and it was a doozy. President Biden’s budget proposal does nothing to address Washington’s profligate spending. The President’s budget includes a 3.2 percent increase in Defense spending and a more than seven percent increase in non-defense spending. That shows the irresponsibility of the budget and why it should be rejected by every member of Congress, regardless of political affiliation. Included in the proposal is a minimum wealth tax on Americans with a net worth of $100 million or more. Not only is a wealth tax almost certainly unconstitutional—as it is a direct tax that is not apportioned across the nation equally—but it also misunderstands net worth. Net worth changes daily and is an impossible number to tax. The proposal would also raise the corporate tax from 21 to 28 percent. This is another anti-business policy that would make growth harder to come by and punish investment in America’s economy. It would also take needed resources away from research, development, and innovation. This money is far better spent in the hands of American innovators than the federal government. Because of the lack of focus on spending, the debt-to-GDP ratio will continue to rise over the next ten years. This is unsustainable and will create a world where the nation spends more servicing the debt than on most major programs. By FY2032, interest costs will be roughly $1.2 trillion, likely larger than the Defense budget. TPA hopes that congressional leadership will come forward with a more serious budget to address the nation’s fiscal health. Read our full statement here. 
 
The Real Antitrust Threat – The Postal Service
 
Audiences watching horror films know too well that, when the menacing phone call is coming from inside the house, the protagonist is bound to have a bad time. Lawmakers and antitrust regulators should take that lesson to heart when evaluating government monopolies lurking deep in the halls of Washington, D.C. bureaucracies. The Department of Justice’s Apple and Google investigations are kicking into high gear, resulting in endless legal costs, convoluted theories of harm, and higher prices for consumers. Yet, regulators bemoaning anti-competitive conduct in the private sector refuse to scrutinize far worse conduct by government-run “businesses” such as the U.S. Postal Service (USPS). Armed with an expansive mandate and far-reaching legal immunity, the USPS has been able to box out any potential competitors and impose their terms on millions of taxpayers and consumers. It’s time for a new and more competitive approach to postal policy. 
 
Despite what folks at the current Federal Trade Commission (FTC) say, it's exceedingly difficult for private companies to deliver a knockout blow to all their competitors. The FTC talks about one possible path to monopoly called “predatory pricing” in which “below-cost pricing allows a dominant competitor to knock its rivals out of the market and then raise prices to above-market levels for a substantial time.” The agency admits this is rare, likely because significant short-term pain outweighs any (hypothetical) long-term gain. But, a government agency such as the USPS with access to tens of billions of taxpayer dollars has little issue undercutting its rivals on “competitive” (i.e., non-monopoly) business lines. Over the past 15 years, America’s mail carrier has greatly expanded its package delivery operations and kept “last-mile” (post office-to-doorstep) prices low. However, these low prices are simply not reflective of underlying delivery costs.  According to a 2022 report by TPA, the USPS is scarcely attributing any vehicle depreciation and network travel costs to packages, even though the agency is in the middle of procuring larger and boxier vehicles specifically designed to accommodate parcels. Strangely, the USPS doesn’t attribute any headquarters-related expenses to package deliveries, even though “the IG has issued multiple reports per year specifically analyzing the rise of the package market and [Negotiated Service Agreements] that are likely package specific.” Because parcel prices must cover the costs borne by their delivery, the USPS' suspiciously low cost estimates give the agency legal room to keep prices low. 
 
Economic analysts Dr. Robert L. Shapiro and Isaac Yoder note that, as a result, “USPS is able to underprice its competitors in parcel deliveries despite its relative inefficiency...As a result, USPS delivers millions of packages for its competitors on a daily basis.” Regulators at antitrust agencies such as the FTC and DOJ should be alarmed that the USPS is undercutting competitors via taxpayer subsidies rather than having better, more efficient operations. But, the antitrust apparatus tends to stay away from federally-sanctioned operations such as the USPS and entrusts oversight to the Postal Regulatory Commission (PRC). The PRC could try to get the USPS to end its pricing shenanigans, but instead chooses to uncritically endorse the agency’s pricing methodology.  Parcel pricing is just the tip of the iceberg for the agency’s anti-competitive conduct. The USPS allows for “extremely urgent” mail to be delivered privately, but this niche has proven narrow. Postal scholars J. Gregory Sidak and Daniel F. Spulber recount, “In a highly publicized incident in 1993, armed postal inspectors arrived at the Atlanta headquarters of Equifax Inc., a large credit reporting company, and demanded to know whether all the mail that it had sent by Federal Express was truly urgent…” Given the mission creep at the Postal Inspection Service, it’s only a matter of time before inspectors start poking around competitors again.  America’s mail carrier can do its part to encourage a more competitive marketplace. By properly pricing parcels, the USPS can deliver on a level playing field with rivals such as UPS, FedEx, and Amazon. The agency could also resolve to stay out of markets such as money orders and banking to avoid repeating the same mistakes it has made for package pricing. Finally, postal leadership should work with Congress to liberalize the mail monopoly and allow for some letter delivery competition. The USPS can compete with private players in select cities while still maintaining its universal service obligation and profiting off its vast network.  Antitrust regulators’ “usual fixes” of prolonged legal battles and divestitures are often clumsy and would be particularly ill-suited toward a federal agency. But, the excesses of a taxpayer-funded monopoly should be a wakeup call for antitrust zealots at the FTC and DOJ. The largest threats to competition lie within Washington, D.C. 
 
Time to Grab the Third Rail
 
A recent report from the Congressional Budget Office (CBO) projects the Social Security trust fund will become insolvent by the year 2032. If that happens without substantive change by Congress, benefits will decrease by at least 20 percent to keep the program going. While congressional leaders want to pretend they don’t want to cut Social Security benefits, automatic cuts will be implemented if the current trajectory isn’t altered. In the words of the legendary Canadian rock band, Rush, “If you choose not to decide, you still have made a choice.” The outlook on Medicare isn’t any rosier. According to a report released by the Medicare Trustees, the plan’s Hospital Insurance trust fund will be insolvent by the year 2028. At that point, hospital payments will automatically be reduced by roughly ten percent to maintain solvency. Again, congressional inaction might boost poll numbers in the short term, but it is clear something must be done to avoid greater catastrophe with one or both programs. Despite the clear data and projections, Biden doubled down on his assertion. Meanwhile, several Republicans have gone out of their way to make clear they oppose making cuts to Medicare and Social Security. Sen. Rick Scott (R-Fla.) amended his spending plan, which would have called for a review of all federal programs every five years. After the State of the Union, Scott announced Social Security and Medicare would be exempt from his “Rescue America” plan.
 
Former President (and now presidential candidate) Donald Trump also voiced his strong opposition to any entitlement cuts on the campaign trail in Florida. “Under no circumstances will we allow anyone to cut Medicare or Social Security for our nation’s seniors. We’re not going to allow that,” he said. All this back and forth on entitlements comes not just in the aftermath of a State of the Union. It also comes in the midst of a debt ceiling fight. The nation is currently at risk of defaulting on its debt obligations as soon as June of this year. The Treasury Department has reached its congressionally-imposed borrowing limit. Without changes going forward, the fiscal state of the nation could be in significant peril. Small changes are not going to alter course enough to make a difference. Leaving Social Security and Medicare out of these discussions would be unwise. According to the Treasury Department, Social Security and Medicare account for 31 percent of all government spending. And, if benefits are going to remain at the same level, they will require even more outlays in the future. This is unsustainable.
 
This trend was noted by former Vice President Mike Pence, who once led the conservative Republican Study Committee during his time as a member of Congress. “We’re looking at a debt crisis in this country over the next 25 years that’s driven by entitlements, and nobody in Washington wants to talk about it,” he said. With entitlements in the news and a debt crisis looming, now is exactly the time for lawmakers in Washington to start talking about entitlement cuts. They must be on the table. There are several solutions that are feasible to address this problem. For Social Security, slowing the growth of benefits over time, with a one- or two-year increase in retirement age should be sufficient to return the program to solvency. For Medicare, certain reforms to institute cost sharing or the elimination of certain types of payments could do the same. There are options. Lawmakers on both sides of the aisle simply must agree to be creative and look at them soberly. The pain and the consequences of reforming these entitlement programs will certainly be felt. That is why the issue has been considered so politically toxic for so long. However, they have now reached the point where doing nothing is no longer a viable option and the consequences of doing nothing will be far more painful in the long-term than making difficult decisions in the short term.
 
BLOGS:

Monday:  Congress Has To Grab The Political Third Rail Everyone Prefers To Ignore 

Tuesday: ‘Right to Repair’ Laws Will Break Innovation and Security   

Wednesday: Taxpayer Protection Alliance Endorses “Identifying and Eliminating Wasteful Programs Act”

Thursday: Taxpayers Protection Alliance Reacts to President Biden’s FY2024 Budget Proposal

MEDIA:
 
March 6, 2023:  WBFF Fox45 (Baltimore, Md.) interviewed me about the BOOST education program.
 
March 6, 2023:  The Daily Caller ran TPA’s op-ed, “Congress Has To Grab The Political Third Rail Everyone Prefers To Ignore.”
 
March 7, 2023: Inside Sources ran TPA’s op-ed, “How a U.S-EU Green Energy Subsidy War Harms Taxpayers.”
 
March 7, 2023:  Townhall.com ran TPA’s op-ed, “FTC's Overreach Hits Tipping Point.”
 
March 7, 2023: Prescottenews.com ran TPA’s op-ed, “How a U.S-EU Green Energy Subsidy War Harms Taxpayers.”
 
March 7, 2023: The Telegraph (Nashua, NH) ran TPA’s op-ed, “How a U.S-EU green energy subsidy war harms taxpayers.”
 
March 7, 2023:  The Detroit News (Detroit, Mich.) ran TPA’s op-ed, “Don't give taxpayer money to 'green' subsidies in EU.”
 
March 8, 2023:  TPA was mentioned in an op-ed titled, “Don't give the IRS access to more of your data” in The Lewiston News-Argus (Lewiston, Mont.), written by Sen. Ken Bogner.

 March 8, 2023: CAPX ran TPA’s op-ed, “Cultural change is crucial to consigning smoking to the past.”
 
March 9, 2023:  WBFF Fox45 (Baltimore, Md.) interviewed me about the Secretary of Labor nominee the impact on Maryland workers.
 
March 9, 2023:  TPA was mentioned in an op-ed titled, “Don't give the IRS access to more of your data” in The Daily Inter Lake (Kalispell, Mt.), written by Sen. Ken Bogner.
 
March 9, 2023:  TPA was mentioned in an op-ed titled, “Don't give the IRS access to more of your data” in The Billings Gazette (Billings, Mont.), written by Sen. Ken Bogner.
 
March 9, 2023: I appeared on WBOB 600 AM (Jacksonville, Fla.) to talk about stadium subsidies and President Biden’s 2024 budget.
 
March 9, 2023: Dan Savickas joined ‘Stacy on the Right’ on SiriusXM to discuss entitlement programs and the President’s budget proposal.
 
March 9, 2023: The Center Square ran TPA’s op-ed, “Op-Ed: FCC declines to weigh in on Standard General’s proposed acquisition of TEGNA.”
 
March 9, 2023: NBC4 Washington interviewed me and quoted me in their story, “Bigger Than Me': Landlords Complain About Missing Rent Payments From DC COVID-Era Program.”
 
March 10, 2023: Issues & Insights ran TPA’s op-ed, “Why Bank Small-Credit Loans Aren’t Better Than Payday Loans.”
 

Have a great weekend!