Digital Social Hour: Federal Budget Lies - The Hidden Redistribution | Richard Stern
Host: Sean Kelly
Guest: Richard Stern, Director for Budget Policy at Heritage
Release Date: October 27, 2024

Introduction

In Episode #834 of Digital Social Hour, host Sean Kelly engages in a provocative discussion with Richard Stern, Heritage's Director for Budget Policy. Stern delves deep into the intricacies of the federal budget, uncovering what he describes as hidden wealth redistribution mechanisms and the true impact of government spending on American households. Throughout the episode, Stern provides a critical analysis of taxation, inflation, government agencies, and fiscal policies, offering listeners a perspective that challenges conventional narratives presented by mainstream media.

Taxation and Government Spending

Stern begins by expressing his frustration with the current taxation system. He states:

"My thing with taxes is I wish I could actually see where it's going to. I really don't know if it's helping anyone."
[00:01]

He emphasizes the opacity surrounding federal expenditures, asserting that transparency is deliberately withheld to maintain public compliance:

"It's not right. They don't want you to know. Everybody could see where their dollars are going. Nobody would want to pay taxes anymore."
[00:06]

Stern highlights that a significant portion of the federal budget, approximately $4.2 trillion, is allocated to wealth redistribution, a process he characterizes as "stealing from hardworking Americans." He questions the efficacy and destination of these funds, suggesting that this vast redistribution fails to produce tangible benefits for the average citizen.

Inflation as a Government-Imposed Tax

A central theme of the discussion is Stern's assertion that inflation acts as an unacknowledged tax imposed by the government. He explains:

"Inflation is a tax. Inflation is imposed by the government printing money, siphoning the purchasing power out of your dollars and handing it to government bureaucrats."
[01:07]

Stern criticizes the misconception that inflation is merely a byproduct of economic factors like corporate greed. Instead, he attributes rising prices directly to governmental monetary policies, which erode the value of individual savings and wages.

The Decline in Dollar Value Since 1913

Stern provides a historical analysis of the dollar's depreciation:

"Before the Federal Reserve was created, your dollar, the dollar then was worth 31 and a half times what it is now. So if you put 31 and a half dollars on a table today, that is what a dollar is worth."
[01:45]

He underscores the drastic reduction in the dollar's value over the past century, attributing this decline to the Federal Reserve's policies initiated in 1913. Stern argues that the consistent devaluation effectively acts as a hidden tax on Americans, diminishing their purchasing power over generations.

Federal Spending on Wars and Foreign Aid

Stern critiques the prioritization of military expenditures, particularly focusing on the funding allocated to Ukraine:

"The government has spent about 173 billion of your dollars producing military equipment for Ukraine for a war that has no importance to the American public."
[02:25]

He compares this spending to direct support for American victims, highlighting the disparity:

"FEMA's giving out $900 checks, $750 checks to those victims. We gave $12,000 per Ukrainian family to them."
[03:21]

Stern argues that such allocations represent a misallocation of taxpayer money, benefiting foreign interests while neglecting domestic needs.

Weaponization of Government Agencies

The conversation shifts to the role of federal agencies like the IRS and the Department of Education. Stern asserts that these agencies have been transformed into tools for political control:

"They are being weaponized. They started as weapons, right?... You might think the Department of Ed is an old department. It's not created 50 years ago."
[07:35]

He contends that the creation and expansion of these agencies have undermined individual freedoms and contributed to societal issues such as declining educational outcomes:

"We actually had tariffs, frankly, that funded most of the federal expenditures. But you know, the federal government at the time there wasn't really that much of a standing military."
[06:08]

Stern laments the shift from a minimalistic federal presence to one that he believes now hampers economic growth and personal prosperity.

Potential for Reversing Government Growth

When asked about the feasibility of scaling back the federal government to its early 20th-century size, Stern remains optimistic:

"We've done it before. We can do it again to get rid of that government."
[06:50]

He reflects on the founding principles that led to America's rise as a powerful nation, suggesting that returning to those fundamental values could restore economic vitality and individual freedoms.

Tariffs and Trade Policy

Sean Kelly introduces a pressing economic topic by referencing a viral episode involving David Pakman's criticism of Trump's tariffs. Stern responds with a nuanced perspective:

"I'm not, generally speaking, a fan of tariffs. Normally, I think that they are taxed on consumers, but there's a nuance about this that everybody is missing."
[10:03]

He explains the complexities of the U.S. tax code, which he claims currently subsidizes foreign imports and imposes double taxation on exports. Stern proposes the implementation of a Border Adjustment Tax as a solution to neutralize these imbalances:

"It's a way of aligning the tax base so that you get to zero tax penalty on domestic production and you get rid of that double taxation of US Exports going abroad."
[10:10]

This approach, according to Stern, would support domestic industries without the adverse effects typically associated with tariffs.

Final Thoughts: A Message to Former President Trump

In wrapping up the episode, Stern shares what he would communicate to Donald Trump regarding fiscal policy:

"I would impress upon him to really go to the American public and be frank with him that government spending is the real burden of the government."
[11:42]

He emphasizes the detrimental effects of excessive government spending, stating:

"Every time the government commits to spend a dollar, it is committing to steal a dollar."
[11:42]

Stern underscores the monumental scale of government debt and its impact on economic opportunities and household finances, urging for greater accountability and transparency in fiscal matters.

Conclusion

In this enlightening episode, Richard Stern provides a critical examination of the U.S. federal budget, highlighting what he perceives as systemic issues of wealth redistribution, inflationary policies, and the expansion of government power. Through detailed analysis and compelling arguments, Stern challenges listeners to reconsider commonly held beliefs about taxation, government spending, and economic policy. Sean Kelly facilitates a robust dialogue that not only informs but also encourages critical thinking about the unseen mechanisms that shape American financial well-being.

Notable Quotes:

• Richard Stern [00:01]: "My thing with taxes is I wish I could actually see where it's going to. I really don't know if it's helping anyone."

• Richard Stern [01:07]: "Inflation is a tax. Inflation is imposed by the government printing money, siphoning the purchasing power out of your dollars and handing it to government bureaucrats."

• Richard Stern [02:25]: "The government has spent about 173 billion of your dollars producing military equipment for Ukraine for a war that has no importance to the American public."

• Richard Stern [07:35]: "They are being weaponized. They started as weapons, right?... You might think the Department of Ed is an old department. It's not created 50 years ago."

• Richard Stern [10:10]: "It's a way of aligning the tax base so that you get to zero tax penalty on domestic production and you get rid of that double taxation of US Exports going abroad."

• Richard Stern [11:42]: "I would impress upon him to really go to the American public and be frank with him that government spending is the real burden of the government."

This comprehensive summary captures the essence of the episode, providing insights into Richard Stern's perspectives and the critical issues surrounding the federal budget and economic policies in the United States.