Federal Budget Lies: The Hidden Redistribution | Richard Stern DSH #834

Summary

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

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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."

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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.

Transcript

[Richard Stern]

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.

[Unknown Speaker]

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. Let me tell you something. Almost all the federal budget goes to some form of wealth redistribution. $4.2 trillion stolen from hard working Americans. Where does it go? Nobody knows.

[Richard Stern]

All right, guys, Richard Stern here today, director for budget policy at Heritage. Thanks for coming on, man.

[Unknown Speaker]

Thank you for having me on.

[Richard Stern]

Yeah, you gave a great talk to everyone. So I appreciate that.

[Unknown Speaker]

Definitely appreciate as well.

[Richard Stern]

Yeah, people, we need people like you that can dive into the numbers and you know, explain what's actually going on because you can't really find that stuff on the traditional media. Right.

[Unknown Speaker]

Well, you know, I think that's part of the problem. Right, is the left is good at getting to empathy and you talk to the right. And half the time it's not in English, it's in gobbledygook that no one can understand. So I definitely appreciate, I try to spend a lot of my time at Focus doing exactly that, which is how do you break this down? How do you put it into a language that most people understand in their day to day lives?

[Richard Stern]

Absolutely. So that being said, what are the most concerning findings you're dealing with right now?

[Unknown Speaker]

So I think we all know inflation is just off the charts, is impacting everybody. But I think the real thing that people don't really hear enough of is that inflation is not just some random thing in the background. It's certainly not corporate greed, as if corporations discovered greed conveniently just a couple years ago. 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. So when you pay higher prices at the pump, pay higher prices at grocery stores, you are paying a tax that no legislator voted for and you're not filing right.

[Richard Stern]

And you did a great job of explaining how like money today isn't the same when we were growing up.

[Unknown Speaker]

No thanks. Yeah, so, so let me tell you this. 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. Before the federal.

[Richard Stern]

What year was that?

[Unknown Speaker]

1913.

[Richard Stern]

Wow. So in 100 years, basically 100 years.

[Unknown Speaker]

We have lost 97 and change percent of the value of the dollar in that hundred plus years. And again, it's a tax that is all. Just the federal government printing that money, devaluing the purchasing power out of your dollars, siphoning the purchasing power over to them. And that's where you've got and all the other things that the federal government's funded in those last hundred years.

[Richard Stern]

Right, let's get into some of those fundings. I mean, we're funding so many different wars. It's crazy. Right?

[Unknown Speaker]

It's absolutely absurd. But, you know, that's part of it again, right? You work hard. Every American goes to work. You're hoping the producing's in service to the rest of the community, to the rest of the nation. And you're right. The government takes hundreds of billions of those dollars and wastes it on manner of things. I give you one stat on this one right here. 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. But you know what that is? It's about $1,300 stolen from every American household.

[Richard Stern]

Wow.

[Unknown Speaker]

Money they could have used. Money that would be important to them. And you know what? That's money that victims of Helene and Milton could use right now. FEMA's giving out $900 checks, $750 checks to those victims. We gave $12,000 per Ukrainian family to them.

[Richard Stern]

Crazy. And that's. Yeah, I don't see the benefit of that, funding that personally.

[Unknown Speaker]

Absolutely. But again, you know, part of this is there's this cartel in D.C. that gets wealthy off of stealing from everybody else. They are the ones that really pocket that profit off of taking that money from you, taking it out of every hardworking family in the country and using it to give this foreign aid. One of my favorite quotes is actually from Ron Paul, which is that foreign aid is taking money from poor people in wealthy countries and handing it to rich people in poor countries.

[Richard Stern]

That's crazy. So when you say getting wealthy, they're giving the money to Ukraine, but somehow figuring out ways to make some money off it. Right, Right.

[Unknown Speaker]

Oh, it says about half the money we've given Ukraine is in the form of cash, but the other half of it actually is, in effect, gift cards. Gift cards you can only redeem at uk You've guessed it, Lockheed north of Gron. So they're the ones getting the profit off of it, off of your dollars.

[Richard Stern]

Wow, that's so nuts. Yeah. My thing with taxes is I wish I could actually see where it's going to, because I'm paying six figures a year at least. And I really don't know if it's helping anyone.

[Unknown Speaker]

It's not. Right. And that's, that's part of the whole deal. Right. They don't want you to know because if everybody could see where their dollars are going, nobody would want to pay taxes anymore. You know, the left has this around the barrel. They're always saying, well, what do you want to cut? The roads, the post office? Let me tell you something, that's almost none of the budget, Almost all the federal budget goes to some form of wealth redistribution.

[Richard Stern]

Wow.

[Unknown Speaker]

Right now. So let me tell you this, dad. If you wanted to end poverty in America and this, this wouldn't be a long term solution. But if you just said to me, look, Richard, I want to write a check to every household in America that's poor, it's at least for one year, bring them out of poverty, you could do that for about $2 trillion with. The federal government currently spends $4.2 trillion a year on wealth redistribution. Twice what you would need to end poverty. And that is $4.2 trillion stolen from hardworking Americans. Where does it go? Nobody knows.

[Richard Stern]

So crazy. And you see Kamala raising over a billion for her campaign.

[Unknown Speaker]

Exactly right. And that's of course, you know, you got Pelosi with a $25 million mansion. Right. You got Biden, who's worth 100 million. We know where some of this money goes. Right.

[Richard Stern]

You look at the, have you seen that graphic of the before and after net worth of president?

[Unknown Speaker]

Oh, of course.

[Richard Stern]

And the only one that lost money is Trump.

[Unknown Speaker]

Only one public servant.

[Richard Stern]

Right, Right. And that's how politics used to be, Right?

[Unknown Speaker]

Exactly right. Because, you know, it used to be, frankly, I mean, before 1913. You know, 1913 is a very interesting year. We didn't just create the Fed, we created the income tax and we got rid of election to the Senate from the state governments. Right. So we move to a regime where you've got election of senators so they're divorced from state interests and the creation of the income tax and the creation of the Fed all in the same year.

[Richard Stern]

Crazy is that when the IRS was made to 1913. Wow. So what were we doing before that?

[Unknown Speaker]

So before that, honestly, the federal government was very small. 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. Right. We had, we had a small standing military good enough to defend the country. There were some road systems and ports that were federally funded. But truth be told, almost nothing was done by the federal government.

[Richard Stern]

Crazy.

[Unknown Speaker]

It maintained your. Your natural rights and maintained a court system and maintained the borders. We had a more sealed border than we have today. We didn't have millions of migrants and drug cartels floating across the border. It worked, right? Somehow, as the government's gotten larger and stolen, more and more of our money hasn't turned into prosperity for the rest of the country. Right.

[Richard Stern]

Do you think it's possible to ever go back to that one day?

[Unknown Speaker]

I definitely do.

[Richard Stern]

You do.

[Unknown Speaker]

So, you know, I'll tell you this, right? I think, you know, we kind of lose sight of this a lot, right? But the founding fathers left the most powerful, wealthiest country on the planet, the British Empire, precisely to get away from an autocratic government that stole the value of everybody, that worked hard to make a country devoted to freedom, to respecting everybody's ability to chase their passions, to build prosperity, not just for themselves, for their free communities. At the time, it looked like a dumb idea. We were a small, tiny country on the other side of the world. They didn't know that they would give rise to the most advanced, most powerful, wealthiest country on the planet. They did, because they followed their convictions and those principles. We've done it before. We can do it again to get rid of that government.

[Richard Stern]

That'd be amazing. But the IRS just hired a lot of agents, so I don't know if that's happening anytime soon.

[Unknown Speaker]

They did. In fact, the left just gave them $80 billion under Biden to hire an army that is larger than the Union army at Gettysburg.

[Richard Stern]

Whoa.

[Unknown Speaker]

Yes. Just to come beat down the doors of churches and nonprofits and businesses across the country to. To. To milk them for every dime they've got.

[Richard Stern]

Are you a believer that these government agencies are being weaponized?

[Unknown Speaker]

Absolutely. But, you know, truth be told, they're being weaponized. They started as weapons, right? You know, Jimmy Carter created the Department of Education. You might think the Department of Ed is an old department. It's not created 50 years ago. And by the way, the US had the highest education outcomes before the creation of the Department of Ed. We're now in the middle of the pack, if not the bottom of the pack, for wealthy countries. And so the Department of Ed was created, right, as a way of siphoning power away from families, frankly, as a way of stealing children away from their parents, of exporting the transmission of culture from parents to kids, to now the government indoctrination camps. Sorry. I mean, the public school system to your kids. So, you know, honestly, most of these agencies were created as weapons. So what I say is they've just continued being weaponized, but they were already weapons to begin with.

[Richard Stern]

That is so crazy. So when our parents went to school, they weren't part of the Department of Education.

[Unknown Speaker]

They were not. Fact.

[Richard Stern]

And they were pretty smart generation boomers.

[Unknown Speaker]

Well, I think about it, right? I mean, you think of all the inventions that made America great, the electrification, eventually, the light bulb, computers, all of these things. We think of the creation of the steel industry, auto industry. All of it was done before there was a federal Department of Education. What have we had since then? A dilapidated industrial base slowing economic growth, wages not keeping up suspiciously. More the government gets involved, the more and more poverty there is. And that is. That is the theme throughout all of human history.

[Richard Stern]

I'm really impressed you have this take as someone that, you know, strives himself on education. Like, you went to college and got a degree and everything, right?

[Unknown Speaker]

Absolutely.

[Richard Stern]

So when did you start realizing this?

[Unknown Speaker]

So, honestly, I was raised as a liberal, actually, so I was. I was drinking the Kool Aid on the other side. But, you know, part of this is I got into politics because I wanted to help people, you know, generally wanted to help people live their best life, to do the things they cared about. And, you know, the more I got into it, the more I studied economics and history, what I really came to realize is these liberal solutions with air quotes aren't solutions at all. They just cause more suffering. So, kind of going from college into starting my life here in D.C. i really got to see that and said, there's gotta be a better way. And I found conservatives.

[Richard Stern]

Wow. Love it. So I had this viral episode last week. Do you know David Pakman?

[Unknown Speaker]

Yeah.

[Richard Stern]

So he came on the show, he's not a fan of Trump's tariffs. So I'd love to hear your take on it, because that clip got a lot of views. So how do you feel about it?

[Unknown Speaker]

Yeah, absolutely. So. So I'll tell you this. I'm not, generally speaking, a fan of tariffs. Normally, I think that they are taxed on consumers, but there's a. There's a nuance about this that everybody is missing. So the way the tax code currently, the grand US Tax code, currently works is we actually subsidize foreign imports right now. So if you produce things domestically in the US you face higher taxation rates. And if you produce things here that you then want to export to other countries, you face doubly higher tax rates. So the truth is the conversation. The moment on tariffs is pretending like it's an even playing field. And then we would put extra taxes on top. That's not really the case at all. So you really can use, if you're careful about it, you can actually use tariff policy to write to that imbalance and get to a tax system that is truly neutral on domestic American production. So there's something called a border adjustment tax. Won't bore your audience with all the wonkery of it, but 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]

Got it. That's a good take. I haven't heard that side of things. Thank you.

[Unknown Speaker]

Well, thanks. Well, and honestly, it's something that doesn't get talked a lot about. And, you know, to be fair, Trump is not very sophisticated in the way he's talking about it, but really, at the end of the day, that's the underpinning of it. So if we did this, you'd fix that imbalance that, frankly, has been part of the cause of draining manufacturing out of the US for decades.

[Richard Stern]

Got it. We'll end off with this. And we're gonna send everyone's answers on this question to Trump today. Actually, if you could tell Trump anything or ask him any question, what would it be?

[Unknown Speaker]

So if I could tell him anything or if I could ask him anything, I'd 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. I think he's done a great job to flush out, to really showcase the D.C. cartel. But I think it's important to impress upon everybody that every time the government commits to spend a dollar, it is committing to steal a dollar. The woke stuff that we're all looking at is just the last step of the process. The real burden, the real crushing weight on wages and economic opportunity is the $10 trillion a year the governments in the US spend. It is the $35 trillion, $260,000 for household debt that the US has.

[Richard Stern]

Love it. Thanks for coming on, Richard.

[Unknown Speaker]

Thank you as always.

[Richard Stern]

Yep, pleasure. Peace.

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