Things are not always as they seem. Many inflation reduction actions do not reduce inflation; debts are transferred, not forgiven; and free money is never free. How much are you willing to pay for government programs that provide incentives and...
Things are not always as they seem. Many inflation reduction actions do not reduce inflation; debts are transferred, not forgiven; and free money is never free. How much are you willing to pay for government programs that provide incentives and subsidies designed to achieve political objectives? Would you like to pay debts belonging to others? Policy double-speak easily distracts the taxpayer from truth and the results are devastating to our citizens, economy, national security, and culture. Linda interviews Joel Griffith, Research Fellow at the Heritage Foundation, to discuss the high costs of free government programs and the action steps every citizen can take to protect their economic future.
© Copyright 2022, Prosperity 101, LLC
For information and resources visit: https://prosperity101.com
If you enjoy this podcast, please consider becoming a sponsor. Contact us today!
Linda J. Hansen: Welcome. Thank you for tuning in to this episode of the Prosperity 101 Breakroom Economics Podcast. My name is Linda J. Hansen. Your host and the author of Prosperity 101 - Job Security Through Business Prosperity: The Essential Guide to Understanding How Policy Affects Your Paycheck, and the creator of the Breakroom Economics online course. The book, the course, and the entire podcast library can be found on Prosperity101.com. I seek to connect boardroom to breakroom and policy to paycheck by empowering and encouraging employers to educate employees about the public policy issues that affect their jobs.
My goal is to help people understand the foundations of prosperity, the policies of prosperity, and how to protect their prosperity by becoming informed, involved, and impactful. I believe this will lead to greater employee loyalty, engagement, and retention and to an increased awareness of the blessings and responsibilities of living in a free society. Listen each week to hear from exciting guests and be sure to visit Prosperity101.com.
Thank you for joining with us today. One of my goals is to help people become informed, involved, and impactful. Whether you are an employer, employee, solo entrepreneur, student, or a retired person, government policies affect you. As inflation has soared, supply chains have been disrupted, and energy costs have skyrocketed, it’s important to not only look at the causes of such upheavals. But we should also think about the action steps that can lead to solutions.
To discuss this with me today is Joel Griffith. Joel Griffith is a research fellow in the Thomas A. Roe Institute for economic policy studies at The Heritage Foundation. Joel earned his Juris Doctor at the Chapman University School of Law and he is currently a member of the State Bar of California. Following law school, he’s had extensive experience in financial, political, and legal areas.
And prior to working at Heritage, he worked as a researcher for a former member of The Wall Street Journal editorial board. Joel was also Deputy Research Director at the National Association of Counties. Most recently, he was Director of the Center for State Fiscal Reform at the American Legislative Exchange Council. Numerous media outlets have featured Joel’s analysis. And I am honored to welcome him on this podcast today. Thank you for taking time for this interview, Joel.
Joel Griffith: Well, Thanks, Linda. Thanks for having me.
Linda J. Hansen: Well, it’s always a pleasure. I know you and I’ve worked together on a few different things in the past. And it’s always great when we can reconnect. And as you and I have been talking about, preparing for this interview, so many things are happening in our policies around the country. And most recently, we can see the effects of the inflation Reduction Act or the so-called inflation Reduction Act. Neither you nor I believe that it will actually reduce inflation.
And then another thing that’s been in the news is the 87,000 IRS agents that are going to be hired to build out the IRS and what the Internal Revenue Service will be doing to American taxpayers. So, where would you like to start with that? Should we start with inflation and the Inflation Reduction Act?
Joel Griffith: Yeah. Inflation Reduction Act sounds like a great place to start. Is this – we see so much of this in politics now where we – politicians seem to be ingesting George Orwell. And George Orwell was famous for talking about a fictitious state in which the meanings of words have been twisted by the powers that be. And that’s exactly what you see with this new legislation, Inflation Reduction Act.
Let’s think about this. Inflation is caused by two primary reasons, either too many dollars and chasing too few goods. That’s always, always the case. And that happens when you have diminished supply or you have increased demand. Well, in the case of the Inflation Reduction Act, three very bad things are going to happen.
Number one, the Act suppresses the supply of energy. It’s a continuation of the war on fossil fuels in favor of inefficient modes of production, like solar panels in the middle of Michigan or wind turbines in places where the wind isn’t blowing. So, we see a suppression of supply and you see a further suppression of supply on business growth because there are tax hikes on capital. There are tax hikes on small businesses.
On the flip side of this, the Inflation Reduction Act, as it’s called, also produces – artificially stimulates demand because it distributes subsidies to favored business and subsidies to favorite political groups, and subsidies for Obamacare. So, we see the government is pushing up demand in certain areas. We see it suppressing supply. And then to make matters even worse to pay for it, the government is going to have to borrow.
And a lot of those new borrowed dollars actually come from the printing presses at the Federal Reserve, and they print the money to buy government bonds. The government can shower those resources on others. So, the Inflation Reduction Act, the bottom line, this is actually going to exacerbate inflation.
Linda J. Hansen: Well, exactly. And you bring up some really good points about how the government decides to intervene in the supply and demand of energy, food, you know, all the things that we use in our society should be a free enterprise society, and supply and demand really help to regulate that, and keep things running smoothly. But when government intervenes and plays its heavy hand in things, you know, things get truly out of balance. And we can see this now.
Joel Griffith: Well, we are seeing this in places, especially California, that has already implemented big pieces of the Green New Deal. We’ve got rolling blackouts that are fairly common. In fact, we expect rolling blackouts for the next week or two. We see places across Europe, Spain, France, and Germany that have really declared war on their fossil fuel sectors and actually have gone even further. Although many of these countries such as Germany and United Kingdom have actually been shuttering nuclear power plants.
Well, now we’re seeing very real problems. We see electricity prices in parts of Germany skyrocketing, not by 50 percent, not by 60 percent. We see some of these electricity prices going up by 1,000 percent. We see some families that are spending thousands of euros on a given month on energy costs. Well, that’s a direct result of years of these countries pushing their economies off the energy cliff by taking natural gas and taking nuclear offline.
And now we know that winter is coming [laughs]. Winter is coming up across some – the northern hemisphere. And we see places like Spain saying, “Oh, you’re not going to be permitted to set your thermostat above 63 degrees or so during the winter.” Well, if you’re like me and have spent a lot of years up north in places like Ohio and Chicago, that’s very uncomfortable to be putting your thermostat at 60 or 61 degrees when it’s 10 below zero outside. That’s what’s happening.
Same thing is holding true on air conditioning. These are basic. Quality of life is being impacted. And meanwhile, the green overlords, the new green fascists, they’re still traveling in their private jets. They’re still eating caviar. But for everybody else, upper middle class, middle class, lower middle class, you’re expected to be hot in the summer. You’re expected to be cold in the winter.
And I’m not making this up. There’s all these headlines now. You’re expected to want to develop an appetite for crickets and insects over meat. And this is just a continuation. And what we see with the Inflation Reduction Act moving us further down towards that road of the Green New Deal, we’re just a few steps behind what is happening in California and what is happening across Europe.
Linda J. Hansen: Well, exactly. And I’m glad you brought up the crickets because, you know, as – it isn’t just energy, that government is trying to dominate in terms of what they think we should be using. And this is all part of a bigger picture. You know, it’s all part of the bigger picture, and I do talk about it on the podcast quite frequently, is that, you know, we are no longer in a Republican versus Democrat world. This is the past in America.
We are about globalism and tyranny versus freedom, you know, versus American identity and freedom. And having these countries around the world be able to have their national independence and global interdependence, but not a one global society. And as we’re being so pushed into these Green New Deal-type ideologies and policies.
You know, it is becoming run by the elitists and really, like you said, they go around in their jets. They go around in their fancy cars, and we are supposed to, you know, eat crickets and it is just not okay. I mean, there’s – I’ve highlighted on the podcast some really unbelievable examples of government interference. I mean, even with Amish farmers.
Joel Griffith: yes.
Linda J. Hansen: Amish farmers who are being punished for, you know, too many cows on, you know, raising organic meat on organic farms. You know, but they’re being punished for too many cows because of their carbon emissions. I mean, it’s just ridiculous and we’re looking at winters that will be very, very difficult. You know, you are right 60 degrees can be actually very damaging for some people for the elderly or for the ill, for the very young. This is not good.
And so, you know, we look at that. But then you mentioned about how we’re going to fund all this. Okay, well, yes, we’re going to be printing too many dollars to chase too few goods, like you mentioned. But there’s also the raising of taxes. And with that comes the 87,000 IRS agents that are being deployed or that this administration wants to deploy towards the U.S. citizens. So, can you address that and how this all plays into that bigger picture we’re talking about?
Joel Griffith: Yeah. With the threat of higher taxes, it’s twofold. Number one, within the package that was just passed. Our real tax increases on businesses and some of those increases are going to be deterring. They’re going to deter businesses from actually investing profits in new capital equipment and new technology, and more jobs. That’s one threat.
But the other threat is from the doubling of the size of the IRS Audit Task Force. We’re talking about hiring 87,000 new agents. Now, when you scatter 87,000 agents over the country, if you will, that’s about one new agent for every 1,500 households. And we know from the past that these audits disproportionately target those with under $75,000 of reported adjusted gross income. And we know that small companies, sole proprietorships, pass-throughs, partnerships, and S-corps, which usually are solely owned by one person, those comprise the bulk of the business audits.
So, this is a very real threat, they’re going to gradually add on and double the size over 10 years. And there’s going to be an armed agent component as well about approximately 1 percent of those new agents will be armed. And I know 1 percent doesn’t sound like a large number but –when right now – I’ll give you an idea how big this is. Right now, there’s about 2,100 armed agents. If 1 percent of that new 87,000 crew is armed, you’re talking about almost a 50 percent increase in the number of armed IRS agents.
Now, I don’t want to get people overly concerned. I think the primary threat here is not an armed agent knocking on any door. The primary threat is just an audit in general. Even if it’s not somebody armed forcing you to hand over more money. Well, a judge’s order, an IRS order can be just as fear-inducing. And these audits – just the process itself, just hiring the CPAs, just hiring the lawyers can nearly bankrupt an individual or bankrupt the business. And then the IRS decides that, “Oh, well, that can be even more money.”
And to be clear on this, this isn’t a matter of necessarily people being dishonest and not paying the taxes you owe. That tax code is so complex, thousands of pages of regulations. And it’s so complex that you can consult five different leading tax lawyers, and you can get not just one, two, three different opinions. You can get 20 different opinions from 5 great tax lawyers. And you can probably get just as many opinions from 20 different IRS agents.
So, you can be doing everything you can to pay what you think you owe, still be audited, still have to pay all the audit fees, and you could still end up being found liable for even more than you’ve already paid. This is a very real threat to American families and American businesses, particularly those that earn less, smaller ones that you might not have a full-time lawyer working for your household or your business or a full-time CPA. You might do your taxes yourself or rely on TurboTax. So, this is going to be a very real increased threat. And even if you’re not audited, I just think the risk itself is going to cause a lot of stress on American families.
Linda J. Hansen: Well, I’ve heard it from a lot of people that they’re quite concerned about it. And you know, this – you mentioned about the small businesses and things. This is so true. It can really impact a business. And you know, when you have a society that is fearful of government, that is not a healthy society. And so, whether it’s fearful of government through audits, fearful of government through the supply chains in food and fuel, fearful of governments through, you know –
Joel Griffith: Yeah.
Linda J. Hansen: – law enforcement agencies that are used more for political purposes than law enforcement purposes, we can’t have a healthy society. So, I said at the beginning of the broadcast that we were going to talk about action steps that could bring about solutions. So, you know, we can talk about these problems and we can always dive deeper into them and go down in detail. So, I’ll make sure that the listeners have information for how to contact you, how to get more information about what you’ve written, and the things that you’ve explained in more detail.
But for listeners who really want to make a difference, they don’t want to sit back and say, “Oh, fine. I’ll just take this.” You know, we want to be able to make a difference. So, let’s start with tax policy. I know, you worked at ALEC and the states and counties that have different tax policies. I know right now, there’s a big move across the states to go with certain flat tax, a tax that’s fair across the board.
I know that Steve Moore was very involved when I worked with Herman Cain, and we did the 999 Plan. And this made something very simple, easy to understand, easy to administer. So, what would you say to business owners or individuals that are listening now that don’t want to take this? They want to see a change.
Joel Griffith: Well, I think what we’ve seen happen in the last two years underscores the importance of Congress and underscores the importance of Congress retaking its power to tell the Federal Reserve what its powers actually are. I mean, what really drove us into the current pit that we’re in with the sky-high inflation, well, the original sin really were the shutdowns that occurred. And some Republicans supported these shutdowns as well. Well, that was the original sin was putting the economy on ice.
But then to see Congress, both Republicans and Democrats, deciding to make it seem as if there are no consequences of the shutdowns by printing trillions of dollars, spending packages worth trillions of dollars to distribute to businesses, to distribute to families, to distribute to those that weren’t working, making sure that most people who weren’t on the job during the shutdowns are earning more than on the job. This was just masking the pain.
And politicians reaped a lot of reward for that because a lot of businesses loved receiving the hundreds and thousands of dollars and I don’t blame them. They were forced to shut down which was immoral to force them to shut down. And families, too. The majority of families received thousands of dollars in checks for children, thousands of dollars just for existing. And this was very rewarding for the politicians because individuals liked it.
Well, I think now it’s sinking in. There’s a real cost to this. We didn’t feel it initially. But now with trillions of dollars circulating through the economy, we’ve seen our free markets become far less free. We’ve seen bottlenecks. We’ve seen delays. We see people that still haven't returned to work. And now sky-high inflation. And something we didn’t even mention, the housing prices. Well, the housing prices soared in large part, too, because we had trillions of dollars of extra liquidity circulating, chasing stocks, chasing cryptocurrency, and chasing housing. Families are quite literally paying for this now.
So, I think number one, we need to hold our politicians accountable, accountable for what they did during the pandemic, and what they approved in terms of spending, both Republicans and Democrats. And second of all, we need to recognize the threat that the Federal Reserve poses to our economy as well. Because think who made it possible for these politicians to spend all this money? Well, it was our central bank that printed dollars to hand over to Congress indirectly by buying up government bonds. And that allowed Congress to spend trillions of dollars without raising taxes. There is a disconnect.
And now two years later, we see these politicians are able to blame businesses. They’re able to blame Putin. They’re able to blame the pandemic. They’re able to blame now – I see Senator Warren the other day blaming the Federal Reserve, possibly for the recession. All these politicians now are shifting the blame, when it was in reality Republicans and Democrats in Congress working together to spend trillions of dollars and then relying on the central bankers to print up the trillions of dollars. Both parties, Congress and the Fed, are responsible for what’s happening today.
And if we don’t like what’s happening today in terms of inflation, because of all this overspending, it’s going to be a lot worse, 5 or 10 years from now if our entitlement system is not reformed because we are – there’s no way to tax the economy to pay for all these promises. Politicians will never have that type of responsibility. No. They’re going to rely on the Fed printing money to pay for all these promises that prior politicians have made because no one has the political will to actually reform the system. And what we’re seeing now is just a taste of what we’re going to see in a decade or so if these changes aren’t made.
Linda J. Hansen: Exactly. And you know, just reminds me of the saying, “Free money is never free.” Yeah. And, you know, Milton Friedman said there’s no such thing as a free lunch. Right? So, you know, free money is never free. And so, as we look at what’s happening in our society and our economy now, you know, average citizens – so, anybody who’s listening now. You may not be a business owner. You may not understand all these economic policies. You don’t have to be as into all the details as Joel is, but you need to be aware enough that you can talk to your elected officials.
You can write a letter. You can make a phone call. You can say you’re for or against certain policies that will help or hurt our economy as we move forward. And the thing about it is our children and grandchildren, you know, we can’t just keep pushing this down the road. We have to think about our children and grandchildren, and what they will be dealing with.
You mentioned some of the hardships that Europe and, you know, other countries across the globe are dealing with right now. And, you know, that’s just a small taste. You know, we think that we are immune here in America because we are the land of plenty. But we are not if we do not adhere to our Constitution, to the rule of law, and to basic economic policies that really allow for the free enterprise and for supply and demand to do what it should in order to keep our economy moving smoothly.
Joel Griffith: You know, the typical family over the last year and a half has lost – a two-income, middle-income family has lost around $6,000 In real wages, annual wages. And those wages aren’t just recouped if inflation were to suddenly come back to normal, let’s say back to 2 percent a year. We – what you see is you see a long-term reduction in income. Because even if your wages start growing to keep up with inflation going forward, that gap now that you have stays in place, even if going forward your wage increases do equal the inflation rate.
So, this is a very real long-term tax now on the American people. And in terms of the Green New Deal, in terms of these energy programs, just the fact that we have this downpayment now on this Green Energy transition, this is a very real signal to fossil fuel companies to drill natural gas frackers, oil drillers, refinery builders, that they’re running a risk of seeing these assets stranded if they invest in more pipelines and more refineries, or in more engineers to drill.
It’s even – if the law isn’t fully changed now, which Biden thankfully doesn’t have the power to fully change that yet – it’s a signal that this is where the left-wingers want the country to go. And that is a big part of the reason why you see a lot of our energy companies, instead of doing what they’ve done in the past and reinvesting their income in more development, they’re recognizing that, “Wow, that money might be lost forever.” And so, they’re handing it back to the shareholders, which is fine to a point. But if we didn’t have the government threatening to put them out of business, they would likely be investing those dollars into more production to ensure that all of us have a better standard of living, rich and poor alike going forward.
Linda J. Hansen: Well, exactly. And those dollars could be invested in more efficient energy sources, clean energy sources. They could be invested into helping to promote regulatory policies that ensure that new energy sources can be developed and commercialized. That will really help advance clean energy as well as efficient energy. And we can have both. We can have both, especially if we keep nuclear in the mix.
Joel Griffith: Absolutely right. Well, we have hundreds of years’ worth of natural – clean, natural gas and clean coal locked up under the ground in this country. And like you mentioned, nuclear as well, which is often prohibitively expensive, not because of the technology itself, but because of all the regulatory hurdles.
I mean, we can’t even get Republicans and Democrats to come together in the Senate and agree on where to store the nuclear waste, which by the way, you can store nuclear waste very, very safely. You can store it very affordably. And the amount of nuclear waste and an entire year for a reactor that would serve as a community, 50,000 people, you can fit into the size of a grapefruit. So, it’s possible to do this. It just takes political willpower.
And in terms of helping bring down energy costs in this country, if you look at Massachusetts, for instance, energy costs for natural gas can be easily triple what they are in places like Ohio. And that’s not because of the distance from Appalachia. Ohio is just as far from the West Virginia, Western Pennsylvania as the East Coast. It’s because left-wingers have put on ice pipelines that would easily run from Pennsylvania to the East Coast. And you know, that doesn’t just harm Republicans or Conservatives, it harms the Liberal Democrats that live in places like Boston and New Haven that are paying triple for their heating costs. And I’m hoping that some of them will wake up as well because it’s a tax on them to please radical environmentalists that are growing in number, the Democrat Party base.
Linda J. Hansen: Well, it is. And so, for our listeners, I know, you want to have more information on what you can do to halt this demise of our economy, and really our national security, and the way of life and our culture in America, and these things come in slowly. And like you mentioned at the beginning, sometimes it’s called one thing but actually does another, like the Inflation Reduction Act, which is doing nothing to reduce inflation.
So, we need to be very wise. We need to be discerning and we need to look beyond the headlines and seek out other sources of information. So, this is just a taste of what you can learn if you follow some of Joel’s writings or listen to his interviews. I know you can follow him on social media. So, Joel, how would people get to you?
Joel Griffith: So, good. If you go to Heritage.org, you can get in our search bar, key in my name, or I think, more importantly, key in the issue that you are most concerned about, and you’ll see just a wealth of opinion pieces, backgrounders, and research that’ll give you the information you need to hold your elected leaders responsible.
Linda J. Hansen: That’s a good point because Heritage does have a great team of researchers and writers that bring forth really solid information. And so, for listeners, you can reach Joel if you go to Heritage.org. That’s the Heritage Foundation. You can search for him there and be able to contact him through there. I know you also post on Twitter and you’re on many national media outlets. So, watch for Joel as you look through social media and through news reports.
But there are many voices that bring forth this research. And you used to work with the American Legislative Exchange Council, too. And we mentioned this move to flat taxes in the States. So, if you would love to see that in your states, listeners, please go to ALEC.org or look up the Rich States, Poor States book that’s published frequently. How to speak about these issues, you don’t have to be an expert, but you do need to be your own advocate.
So, Joel mentioned some action steps like make sure that you hold your elected officials accountable. Don’t be afraid to call, to write, to e-mail. Make sure that you know what is good for your family and how these things will impact your finances and the future for your children and grandchildren. But always remember free money is never free. And the government has nothing until we give it to the government first. And whether it’s 87,000 IRS agents or an Inflation Reduction Act, we just – you know, you can’t put lipstick on a pig.
You know, it doesn’t matter what we call it. If it’s not good economic policy, it will not be good for individuals, families, and businesses. So, whether you’re, like I said, an employer, employee, student, retired person, it doesn’t matter. These policies affect you, both now and in the future. So, Joel, any closing thoughts?
Joel Griffith: No, I really enjoyed being on. These are very timely matters. And it is one of these rare times where we are acutely feeling the impact of the recent decisions that our political leaders have made over the last two years. So, I think it’s important that we take advantage of this to actually explain to people why it is prices are rising, why it is home prices are rising, and why it is gas prices are more than doubled in the past year.
Linda J. Hansen: Well, exactly. Thank you. And for listeners, you know, this is not a time to be complacent. As I mentioned before, in America, we took a lot of these things for granted. And America is only as free as the people demand that it be. We are in charge. We, the People, still run the government. And so, we have to be able to take that back in a sense and have policies that really work to help families and businesses, and our economy run smoothly. We want to be the leader of the free world and be able to share that prosperity with others across the globe. So, thank you, Joel.
Joel Griffith: Thank you, Linda.
Linda J. Hansen: Okay. And again, listeners, you can go to Heritage.org to find Joel and some of the research that he’s been involved with. So, thank you.
Thank you again for listening to the Prosperity 101 Podcast. If you enjoyed this episode, please subscribe, share, and leave a great review. Don’t forget to visit Prosperity101.com to access the entire podcast library, to order my newest book, Job Security Through Business Prosperity: The Essential Guide to Understanding How Policy Affects Your Paycheck, or to enroll you or your employees in the Breakroom Economics online course. You can also receive the free e-book, 10 Tips for Helping Employees Understand How Public Policy Affects Paychecks.
Freedom is never free. Understanding the foundations of prosperity and the policies of prosperity will help you to protect prosperity as you become informed, involved, and impactful. I give special thanks to our sponsors, Mathews Archery, Inc. and Wisconsin Stamping & Manufacturing. Please contact us today at Prosperity101.com to let us know how we can serve you. Thank you.