At Some Point You've Been Subsidized Enough

Image via IowaDawg

I have to disagree with our good friend at The Lonely Conservative on this idea from the Wall Street Journal:
It’s so ironic that President Obama goes out on the stump day in and day out bashing the wealthy while providing them with subsidies that add up to hundreds of billions of dollars every year. Stephen Moore and Walter Williams propose The Millionaire Subsidy Elimination Act. Their intention isn’t to bash millionaires, and they aren’t calling for higher taxes – only an end to the transfer of wealth to those who don’t need it. Unfortunately, it’s a bipartisan problem.

The much bigger fiscal drain from the wealthy is on the federal expenditure side of the budget ledger: tens of billions each year in grants, loans, subsidies, guarantees and benefits pocketed each year by wealthy Americans as individuals and firms. Any campaign to downsize big government will only succeed if the needed deep cuts in spending are deemed by voters as equitable. In an era of $1 trillion-plus deficits and a $15 trillion national debt, we would like to think that a national consensus could be reached to eliminate handouts to individuals and companies with net incomes above $1 million.


Last month Sen. Tom Coburn (R., Okla.) put out a report, “Subsidies of the Rich and Famous,” that identified tens of billions of dollars of handouts to the wealthy. His report included farm payments under government programs to rock stars like Bruce Springsteen and former professional athletes like Scottie Pippen.

Rather than stand up against all this, Republicans recently allowed the Federal Housing Administration to guarantee home mortgages of up to $750,000. Not many in the bottom 99% can afford such homes.
[emphasis mine]

Sorry, I’m not keen on this idea.

The weird and perverse consequences of implicit marginal tax rates (income + subsidies - taxes) are already bad enough. Let’s not make them worse.

End government subsides? Yes.

Target some arbitrary income bracket for poetic justice? No.

This comes dangerously close to Obama's At some point you’ve made enough money" mentality.

Walter Williams is usually right on target. I’m surprised he has adopted the language of the Occutards to promote this idea.

We need to get away from the idea that government-funded “grants, loans, subsidies, guarantees and benefits” are appropriate in any form, even when they’re selectively redistributed like Marxist candy to the middle class. From that point of view, The Millionaire Subsidy Elimination Act falls woefully short.

Recommended reading:

Look who pays for the bailout: Meet the Henrys


  1. I've noticed from these clowns that "at some point you've made enough money" and "at some point you've been subsidized enough", but you never hear "at some point you've been taxed enough". My God, we went to war against England for less than this, so why are we continuing to tolerate this BS?

  2. I like that graphic! "99% of the problem"

  3. The FHA limit is $729,750, an extension of previously increased limits. This limit is only available in a few counties where house prices are extremely high. That much would barely get you a 60 year old 3 bedroom, 1 bath house in San Francisco. The FHA tightened their credit limits, so there probably won't be many FHA guaranteed loans anywhere near this upper bound.

    Any such buyers would merely be middle class. The wealthy wouldn't live in any house worth less than $2 million in SF.

    That said, I'm not generally supportive of FHA guaranteed loans. When given to low and moderate income families, it becomes an anchor. Lots of LMI families have no jobs and are now defaulting on their FHA mortgages.

    The FHA is going hat in hand to Congress begging for a bailout on their FHA and reverse mortgage programs. When FHA ran surpluses, Congress took and spent all the money.

    In addition to the FHA, we had Fannie, Freddie, FHLBs, Ginnie, VA, and thousands of state and local programs promoting "affordable" housing goals. Then there is the home mortgage interest deduction. We've been served the housing Flavor Aid for a long time.


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