Beginner's Guide to Door-to-Door Fundraising

What You Need

> Nice clothing  - look presentable!
> a pen
> a clipboard
> a petition


The Numbers Game

Half of the doors you knock will open. These become "contacts."
Half of the contacts will sign.
Half of the signers will contribute.


The Presentation

1) Introduction
a) I AM: introduce yourself
b) WE ARE: introduce organization
c) WE DO: introduce the issue
d) WE WANT: let them know you are gathering signatures
- hand over the clipboard vertically so they grab it. let them read it. be the person to speak next. -

2) Body
a) PROBLEM: state the problem
b) SOLUTION: define the solution
c) CONFIRMATION: does your contact agree?
- once you have identified their support, use a brief sentence to clarify why the issue is important to them. -
- while they're signing explain how fundraising helps the campaign. "Great, your name shows you agree and the contributions get the work done. I'll let you know how folks are giving while you put down your name." -

3) Fundraising
a) No set amounts
b) Encourage checks or credit
c) Set a goal - start high!
d) Confirmation - ask if they can give that amount

Example

1) Hi! I'm Alex from the Campaign for Liberty, which is a nonprofit working to educate elected officials and the general public on economic and Constitutional issues. Currently we're working on a petition to repeal Obamacare. Could you check it out?
- hand over the clipboard vertically so that they grab it and read it -

2) Obamacare raises taxes by over $600 billion, increases government spending, increases the national debt, and doesn't even accomplish its stated goal of providing health insurance coverage for all. That's why we want to repeal Obamacare and replace it with a market solution that increases consumer choice and doesn't worsen our economic situation. Is this something you agree with?
- hand them the pen so they can sign. when they begin signing, launch into your fundraising rap. -

3) Great, your name shows you agree and the contributions get the work done. I'll let you know how folks are giving while you put down your name. There are no set amounts and we do encourage checks or credit for our safety. Right now, we're setting a goal of $36 per household; that'll give us $3 per month for the next year to run this campaign. Is that an amount you can give?
- you should be able to fundraise enough this way to give back to the organization AND keep yourself employed. -

What You Accomplish

Now you have a list of people who agree with you on this issue. Hopefully, you get their name, e-mail, phone number, and address. You can use this information to contact them regarding important legislation or local events they're invited to. Remember - always ask for contributions at your local events!

The list will make you a political force in your local community, since now you have a number of voters you can influence to vote the way you want them to. The money you fundraise keeps you employed but also gives the organization enough money to hold educational events and engage in direct mailings, etc.

Fundraising for Social Change: Canvassing

Note: This post is an outline of Chapter 19 in Kim Klein's "Fundraising for Social Change" (Fourth Edition).

Canvassing is a technique that involves a team of people from your organization going door-to-door requesting contributions for your group's work. This is primarily an organizing strategy; no organization should undertake a canvass simply to raise money. That said, a well-run canvass can generate a lot of gross income.

Though part-time canvasses can be run with volunteers, most canvasses are full-time operations involving salaried or commissioned employees who work 40 hours a week and solicit in neighborhoods on a regular, revolving basis.


Advantages and Disadvantages of Canvassing

There are three main advantages to canvassing as a fundraising strategy:
1. An established, well-run canvass can provide a reliable and substantial source of income for your organization.
2. The volume of personal interaction from face-to-face contact with dozens of people can bring in more new members than any other strategy.
3. Canvassers bring back to the organization the public's opinions and perceptions of what your organization is doing.
 
The disadvantages to a canvass:
1. If done full-time with paid canvassers, they are labor-intensive, generating high overhead that absorb 60%-80% of the gross earnings of most canvasses.
2. It requires separate staff and office space as well as extensive bookkeeping and supervision.
3. Canvass income can be unreliable if the top canvass staff is disorganized or incompetent or if too many canvasses are operating in an area.
4. The canvassers themselves can give the organization a bad reputation if they are unkempt or rude.
5. Donors do not like giving to organizations that use canvassing because of high overhead costs.


Elements Needed to Run a Canvass

Four elements must be present for an organization to operate an effective canvass:
1. The organization must work on local issues: people give when they perceive that an issue affects them and their neighborhood. Your work can have a national impact, but in canvassing you must explain how this issue affects the resident directly.
2. People must feel that even a small donation will make a difference. Donations made to canvassers rarely exceed $50. People must feel that their small donation is needed and will be well used.
3. People must feel confident about your organization. Their confidence will be inspired by your organization's accomplishments. A specific plan of action that can be explained simply and quickly and that sounds effective is essential. Media coverage of your work is a major boon to canvassing.
4. You must be able to distinguish your organization from any other organization doing similar work without implying any disrespect for the other organization.


Setting Up a Canvass

First, check state and local laws and ordinances concerning canvassing. You can find out about state laws governing canvassing from the attorney general's office, which generally monitors all rules related to charitable solicitation. Many states publish handbooks on canvassing regulations. Local ordinances are sometimes more difficult to discover, since several city departments may have jurisdiction over different parts of the canvassing operation. Contact the police department and ask for notification and application procedures for a canvass. Be sure to write down whatever the person tells you, and get his or her name so that if you get a different story from another police official you can refer to this phone call. Contact the city attorney's office for information regarding solicitation of money for charity. Sometimes the mayor's office has some jurisdiction over these matters. In general, informing as many people as possible about your canvassing operation will ensure the least amount of interference later.


Study the Demographics
Gather demographic data on the area you plan to canvass: population density, property values, how many of the people are homeowners, what type of work most people do, what the income levels are, etc. This information is available from various sources, including local people, items in the newspaper, volunteers and board members who have lived in the area, the Chamber of Commerce, and from developing your own sense from driving around the neighborhoods.

Remember one important point in assessing demographic data: A canvass rarely does well in an affluent neighborhood. In fact, affluent people generally do not make contributions at the door. Their charitable giving is usually done through major gift solicitation, personal mail appeals, or special events. Canvassing operations do best in middle and lower-income neighborhoods, where giving at the door is more common.

Another demographic item you need to evaluate is whether the population is dense enough to make it worthwhile to canvass. Canvassers need to be able to reach 80 to 100 homes per night.
Finally, you need to evaluate whether the area is safe for canvassers. A good canvasser may be carrying $500 or more by the end of the evening, much of that in cash. Canvasses in high-crime areas (which can still be successful) sometimes send their canvassers in pairs, but this doubles the labor cost. Others have a roving car to check in on canvassers and to pick up their cash.


Hire Staff
The staff of a canvass varies from place to place but generally includes several individuals with the following roles:

• Canvass Director: This person supervises the entire canvass operation, including hiring and firing canvassers, researching areas to be canvassed and mapping out the revolving canvass for the area over the course of a year, keeping the organization in compliance with the law, keeping up-to-date on new laws, and planning and updating materials.
• Field Manager(s): Each of these staff transports and supervises a team of five to seven canvassers. Each field manager assigns their team to various parts of the neighborhood, collects the money at the end of the evening, and trains new canvassers on the team. This person also participates as a canvasser.
• Office Manager: This support person manages the office, including keeping records of money earned by each canvasser, replacing canvass materials as needed, scheduling interviews with prospective canvassers for the canvass director, answering the phone, and generally acting as a back-up person for the canvass operation. This person does not canvass.
• Canvassers: These are the people who actually carry out the canvass. They usually have a quota - an amount of money they must raise every day or every week. Their pay is either a commission, a straight salary, or, most commonly, a base salary plus commission.

Materials
Canvassers must be equipped with various materials, including any identification badges or licenses required by the city or state, newspaper clippings about the work of the group, a receipt book, and clipboards to carry the materials to be given away which include brochures about the organization and return envelopes.
Many canvassers use a petition to get the attention of the person being canvassed. The canvasser will ask, "Would you sign a petition for..." and briefly explain the cause. While the person is signing, the canvasser will ask for a donation as well.

Canvassers should try to get the gift right at the door. However, for people who need to think or discuss it with a roommate or spouse, the canvasser can leave a brochure and a return envelope. A brochure should also be given to people making a donation, because on reading it, some of them will send an additional donation. Do not assume when people say they need to think about your request that they mean they are not going to give - leave the materials and act as if you believe the person. Most people do not give money on the spur of the moment, and people who need to think about what their gift will be to your group may well become major donors.

All of the information is carried on a clipboard, which makes it easy to display and lends a degree of authority to the canvasser.


The Canvasser's Workday
At the beginning of the canvasser's workday, the field manager describes the neighborhood they will be canvassing and relates any information or special emphasis on issues that they should present to this neighborhood. The crew begins canvassing around 4PM and ends at 9PM, when they are picked up by their field manager and taken back to the office. They turn in their money, make their reports, and finish around 10PM.

Second only to quality of canvass staff in ensuring the success of a canvass is an efficient recordkeeping system. After each neighborhood is canvassed, an evaluation of the neighborhood should be filed along with the demographic data on that neighborhood that led to its being chosen as a canvass site. These data can then be reevaluated in light of the canvassers' experience. Any special considerations, such as "no street lights," can also be noted in the evaluation.

Many people worry that theft by canvassers will be a problem. Theft occurs no more often by canvass workers than by any others. Careless bookkeeping, however, can cost money and can give the impression that money has disappeared. At the end of the evening, both the canvasser and the field manager should count each canvasser's money brought in. The field manager enters the amounts under each canvasser's name on a "Daily Summary Sheet." The money and the summary sheet are then placed in a locked safe, and the office manager will count the total again in the morning and make a daily deposit to the bank. At the end of the week the office manager tallies the total receipt of each canvasser and prepares the payroll sheet.
Canvassers who fail to bring in their quota for more than a week must be retrained or fired. Strict discipline is important in a successful canvass, and keeping performance records will help to maintain a good canvass team.

Privatizing Mass Transit

"Overlegislation" by Herbert Spencer

An interesting excerpt from Overlegislation by Herbert Spencer:

Officialism is habitually slow. When nongovernmental agencies are dilatory, the public has its remedy: it ceases to employ them and soon finds quicker ones. Under this discipline all private bodies are taught promptness. But for delays in state departments there is no such easy cure.

[...]

Again, officialism is stupid. Under the natural course of things each citizen tends toward his fittest function. Those who are competent to the kind of work they undertake succeed and, in the average of cases, are advanced in proportion to their efficiency; while the incompetent, society soon finds out, ceases to employ, forces to try something easier, and eventually turns to use.

[...]

How invariably officialism becomes corrupt everyone knows. Exposed to no such antiseptic as free competition — not dependent for existence, as private unendowed organizations are, on the maintenance of a vigorous vitality; all law-made agencies fall into an inert, overfed state, from which to disease is a short step. Salaries flow in irrespective of the activity with which duty is performed; continue after duty wholly ceases; become rich prizes for the idle wellborn; and prompt to perjury, to bribery, to simony.

[...]

It is the inevitable result of destroying the direct connection between the profit obtained and the work performed. No incompetent person hopes, by offering a douceur in the Times, to get a permanent place in a mercantile office. But where, as under government, there is no employer's self-interest to forbid — where the appointment is made by someone on whom inefficiency entails no loss — there a douceur is operative. In hospitals, in public charities, in endowed schools, in all social agencies in which duty done and income gained do not go hand in hand, the like corruption is found — and is great in proportion as the dependence of income upon duty is remote. In state organizations, therefore, corruption is unavoidable. In trading organizations it rarely makes its appearance, and when it does, the instinct of self-preservation soon provides a remedy.

[...]

Between these law-made agencies and the spontaneously formed ones, who then can hesitate? The one class are slow, stupid, extravagant, unadaptive, corrupt, and obstructive: can any point out in the other, vices that balance these?

It is true that trade has its dishonesties, speculation its follies. These are evils inevitably entailed by the existing imperfections of humanity. It is equally true, however, that these imperfections of humanity are shared by state functionaries; and that being unchecked in them by the same stern discipline, they grow to far worse results. Given a race of men having a certain proclivity to misconduct, and the question is whether a society of these men shall be so organized that ill conduct directly brings punishment, or whether it shall be so organized that punishment is but remotely contingent on ill conduct? Which will be the most healthful community — that in which agents who perform their functions badly immediately suffer by the withdrawal of public patronage, or that in which such agents can be made to suffer only through an apparatus of meetings, petitions, polling-booths, parliamentary divisions, cabinet-councils, and red-tape documents?

Herbert Spencer understood the workings of government long before the advent of "public choice" economics.

Privatize It!

The plight of many local governments is this kind of low-level socialism:

Urban Planning is Central Planning

And we know that central planning doesn't work.

Detroit Light Rail?

The light-rail advocates have the cause-and-effect mixed up: mass transportation does not bring prosperity to a city, but it's the prosperity that creates the demand necessary for mass transportation to be profitable.

Detroit doesn't need government-imposed light rail, but a pro-business climate.

TJ Rodgers on Green Energy

A Visitor From The Past

A VISITOR FROM THE PAST
by Thelen Paulk

I had a dream the other night, I didn't understand.
A figure walking through the mist, with flintlock in his hand.
His clothes were torn and dirty, as he stood there by the bed,
He took off his three-cornered hat, and speaking low, he said:

"We fought a revolution, to secure our liberty.
We wrote the Constitution, as a shield from tyranny,
For future generations, this legacy we gave,
In this, the land of the free and the home of the brave."

"The freedom we secured for you, we hoped you'd always keep.
But tyrants labored endlessly, while your parents were asleep.
Your freedom gone, your courage lost, you're no more
than a slave,
In this, the land of the free and the home of the brave."

"You buy permits to travel, and permits to own a gun,
Permits to start a business, or to build a place for one.
On land that you believe you own, you pay a yearly rent,
Although you have no voice in choosing how the money's spent."

"Your children must attend a school that doesn't educate.
Your Christian values can't be taught, according to the state.
You read about the current news, in a regulated press.
You pay a tax you do not owe, to please the I.R.S."

"Your money is no longer made of silver or of gold.
You trade your wealth for paper, so your life can be controlled.
You pay for crimes that make our nation turn from God in shame,
You've taken Satan's number, as you've traded in your name."

"You've given government control to those who do you harm,
So they can padlock churches, and steal the family farm,
And keep the country deep in debt, put men of God in jail,
Harass your fellow countrymen, while corrupted courts prevail."

"Your public servants don't uphold the solemn oath they've sworn.
Your daughters visit doctors so their children won't be born.
Your leaders ship artillery and guns to foreign shores,
And send your sons to slaughter, fighting other people's wars."

"Can you regain freedom for which we fought and died?
Or don't you have the courage or the faith to stand with pride?
Are there no more values for which you'll fight to save?
Or do you wish your children to live in fear and be a slave?"

"Sons of the Republic, arise and take a stand!
Defend the Constitution, the Supreme Law of the Land!
Preserve our great republic and each God-given right,
And pray to God to keep the torch of freedom burning bright!"

As I awoke he vanished, in the mist from which he came.
His words were true, we are not free. We have ourselves to blame.
For even now as tyrants trample each God-given right,
We only watch and tremble, too afraid to stand and fight.

If he stood by your bedside, in a dream while you're asleep,
And wondered what remains of our rights he fought to keep,
What would be your answer, if he called out from the grave?
Is this still the Land of the Free and the Home of the Brave?

My Weekend Paul-Chasing

Events I attended:

Saturday - Soldiers, Airmen, and Sailors for Ron Paul - News Article

Sunday - Small Business and Union Workers for Ron Paul - News Article

Monday - Solving Detroit's Crises: A Townhall - News Article

Libertarian Solutions to Environmental Problems

My College Rant

A college education is something my parents would have had to get had they stayed in socialist Poland. That's simply because not having a college education meant working on the docks, in the factories, or underground in the coal mines. There weren't any real opportunities. That is how all stagnant societies are: they are bureaucratized and thus require artificial and token certificates and licenses in order to advance and climb the socioeconomic ladder.

America used to be different. America used to be the land of opportunity. You didn't have to have a college education or even any formal schooling. You had the opportunity to network, to start on the bottom rung of society, save your money, and work up the ladder. Your children had the same opportunity, so over time your family had the possibility of traveling from the very bottom to the very top. Case in point: people like John D. Rockefeller and (later) Arthur Jones. This still exists in some corners of America, as evidenced by successful college drop-outs like Steve Jobs and Bill Gates, but this is rapidly fading.

But America has lost that vitality, youthfulness, and opportunity. Overregulation, overtaxation, and overspending has thrown our economy back to the feudal ages, when you needed a permit from the government to run any business, you needed a government license to get any good-paying job, and all of the fruits of your labor were automatically assumed to be owned by someone other than yourself. Along with a decaying, expanding government in its death-throes, our culture has decayed. Now everyone must go to college to get a degree, even if that degree is a piece-of-shit English degree that won't serve you later in life. Barely anyone will hire you to do any worthwhile job if you don't have some degree, even if it is not related to the work to be done.

If we peeled back the government controls and restrictions, if we peeled back the welfare state, then everyone would not have to go to college. We'd return to a true opportunity society where one rises based on their merits, not on some artificial bureaucratic processes involving government licenses and permits.

And two more things that I don't know how to fit into this post:

1. College schooling (not education) is a bubble driven by artificially low interest rates and government subsidies and restrictions. It'll collapse soon.

2. The Founding Fathers and most great intellectuals throughout history were self-educated. They did not need formal bureaucratic processes and government licenses to make the great breakthroughs that they made.

Ron Paul on Earmarks

Earmarks don't actually increase spending. They only "assign" how that money is to be spent. That assigning ought to be done through the legislative branch, which is closer to the people, than through the executive branch, which concentrates power away from the people.

Walter Block's Environmentalism

Why Elizabeth Warren Is Stupid

She acts as if "the rich" pay no taxes - but they pay more in personal income, corporate, business, capital gains, property, and sales taxes than "the rest of us." And not only do they pay MORE than their fair share of taxes, but they also benefit society by producing goods the rest of us enjoy. Yet somehow we must punish "the rich?" What a joke.

The Problems with Rick Perry

Keeping in line with my Reagan post, here are a few quick facts about Rick Perry as Governor of Texas:

- Texas state debt has more than doubled under Rick Perry. [source] Is this really the kind of "leadership" we can afford?

- Government spending has increased 79% under Perry's watch. [source] How could a principled fiscal conservative let this happen?

- He has enacted numerous tax increases, including a new business tax and taxes on tobacco products, fireworks, used cars, and diesel equipment.

- He has used the revenues from the aforementioned tax hikes to lower the property tax. This is a very shrewd political move. Let me explain why: Most people "feel" the impact of property taxes. Everyone who owns a house pays property taxes. Everyone who owns a ranch or a farm or any land pays property taxes. However, most people don't "feel" the impact of business taxes. Though business taxes still end up harming everyone by having downstream effects on production and prices, most people don't "feel" these effects because they don't have to directly pay the bill - only businesses do. Most people won't notice the slightly increased prices or slightly lower wages or slightly higher unemployment that will occur as a result. Likewise, many sales taxes, such as taxes on tobacco or used cars, are included in the price of a good sold on the retail level ( in other words consumers are not told how much tax they're paying). So what's the overall result here? Perry is creating the illusion of cutting taxes for the average taxpayer in Texas, while he is simply replacing the lost tax revenue from obvious taxes with new tax revenue from a hodgepodge of hidden taxes. One problem with this approach is that many small taxes have higher compliance costs than a single larger tax, so such a set-up creates some inefficiencies. More important, however, is that taxpayers are less aware of the price they pay for government and are thus less likely to organize themselves in order to demand lower taxes and less spending.

- A state payroll tax levied solely on business known as the "unemployment tax" has risen during Rick Perry's reign as Governor. Though this tax increase was "automatic," there was nothing blocking the Governor from doing something in order to prevent this tax increase during a recession, when such a tax would be the most harmful to the economy. The least he could do would be to cut some other tax in order to offset this increase in the unemployment tax. So why did the Governor sit idly by while twiddling his thumbs? Because he's a shrewd politician who knows that he can avoid getting blamed for an "automatic" tax increase while he does get the benefits from said tax increase - more revenues in government coffers and a lower budget deficit, which he can then boast about and claim he had something to do with.

- So, following the above, net taxes have increased, and Rick Perry cannot excuse himself by saying that those tax increases were driven by an "automatic" tax hike. [source]

- There's also the problem of the Texas DREAM Act which Rick Perry supported. The DREAM Act is a law which allows illegal immigrants living in Texas to go to college and pay in-state tuition. So, Rick Perry subsidized illegal immigrants to go to school at a cheaper rate than out-of-state US citizens. Does this make sense to even the most pro-immigration, pro-open border, and pro-welfare people? Doesn't this violate every standard of fairness one can think of?

Anyway, the bottom line is that Rick Perry has increased taxes, government spending, and state debt in Texas. So can anyone seriously argue that this guy is some Tea Party hero who will save us from the jaws of Big Government? Or is he just another shrewd politician trying to get in on the action?

Do We Really Want Another Reagan?

Here is my question to all Republicans, conservatives, Tea Partiers, and everyone else who is a fan of limited government: Do you really want another Ronald Reagan? Do you really think Reagan was a godsend for Republicans? Do you think that Reagan was the greatest fiscal conservative to occupy the White House and do you desperately desire another Reaganesque Republican to pursue the Oval Office? Well, think again.

As Governor of California, Reagan:

- Increased the government spending by 122% during his 8-year tenure as governor.
- Raised taxes in 1967 by 33% or $1 billion per year, equivalent to $17 billion per year in today's dollars. His tax proposal was the largest tax hike proposed by a governor in the history of the United States up to that point. It increased, among other things, personal income taxes, corporate and bank taxes, and inheritance (aka "death") taxes.
- Created 73 new government councils and commissions which mired Californian businesses in crippling regulations - such as the California Energy Commission which, among other things, required a three-year review process before any new power plants could be constructed. Could he think of any better way to increase energy costs?
- Proposed to raise taxes again in 1970 by $1.1 billion, but his proposal was defeated by a legislature which apparently was more fiscally conservative than him.
- Grew the state bureaucracy by 20%, from 158,000 to 192,000.
- Increased taxes in 1971 by $508 million - equivalent to $6 billion in today's dollars. This round of tax hikes included a new alternative minimum tax and increases in the personal income tax and the bank and corporate tax.
- Increased welfare payments by 43%, after he booted 510,000 off the dole for no net impact in welfare costs.
- Raised taxes in 1972 by $1.1 billion, or $12.5 billion in today's dollars, which consisted of increases in the sales tax and the bank and corporate tax.
- More than doubled state income taxes from $7.68 per $1000 of personal income to $19.48.
- Fought against initiatives similar to Prop 13 in 1968 and 1972.
- Overall, he tripled state revenues from $2.9 billion to $8.6 billion.

As President, Reagan:

- Increased government debt a whopping 40.9% his first term and 40.2% his second term.
- Cut tax rates in 1981 - but allowed "bracket creep" from inflation and payroll tax increases to more than offset these tax cuts.
- Increased government spending 14.5% his first term and 7.4% his second term.
- Raised taxes in 1982 by close to 1% of GDP, making it the largest peacetime tax increase in American history.
- Increased government spending from 27.9% to 28.7% of GDP - that's more than Ford and Carter combined.
- More than doubled foreign aid.
- Increased federal entitlements, such as Social Security and Medicare, from $197.1 billion in 1981 to $477 billion in 1987.
- Lowered income tax rates overall, especially for the wealthy, but replaced those income tax cuts with various hidden taxes such as the gas tax which hit low-income households disproportionately hard.
- Expanded the power of the IRS.
- Promised to eliminate the Departments of Education and Energy - yet failed to do so. In fact, the Department of Education's budget more than doubled to $22.7 billion.
- Halted the momentum for deregulation which Carter created.
- Increased the economic costs of regulation.
- Increased the size of government bureaucracy by an additional 230,000 workers.
- Restricted trade by doubling the portion of imports under quotas and other trade restraints.
- Used dubious doublespeak such as "revenue enhancements" to hide the fact that he was raising taxes by eliminating tax credits and deductions which many businesses and middle income Americans benefited from.
- Increased marginal tax rates on 40% of Americans with the 1986 Tax Reform Act.
- Supported the FDA and wanted to expand OSHA, among other regulatory agencies.
- Increased the debt-to-GDP from 32.5% to 53.1%.
- Backed off trucking deregulation, which even Ted Kennedy favored.
- Raised taxes a total of 11 times.

Reagan was no fiscal conservative or free market capitalist. As Governor of California, he raised taxes and expanded the size and scope of government in every conceivable manner - and as President of the United States, he might have cut income tax rates, but he did so while eliminating or reducing many important tax credits and deductions, peppering the US economy with hidden taxes, raising payroll taxes, and allowing inflationary "bracket creep" to overtake the benefits of his tax rate cuts. Moreover, government spending, deficits, and the national debt all increased when Reagan was President. Its time for Republicans to turn their back on this Big Government RINO and forge ahead with real dedication to fiscal conservatism and free market capitalism.

All of the information presented here was culled from:
* The Two Faces of Ronald Reagan and The Myths of Reaganomics by Murray Rothbard, an economist who received his PhD from Columbia University, taught at Brooklyn Polytechnic Institute from the mid 1960s to the mid 1980s and was S.J. Hall Distinguished Professor of Economics at the University of Nevada, Las Vegas.
* The Sad Legacy of Ronald Reagan by Sheldon Richman, the editor of The Freeman, published by the Foundation for Economic Education.
* Reagan's Forgotten Tax Record by Bruce Bartlett, a former adviser to Ronald Reagan.
* National Debt by US President from Wikipedia.

Obama's "American Jobs Act" Fudge

President Obama’s so-called “American Jobs Act” consists of $447 billion in tax cuts and spending increases meant to stimulate job creation and economic growth.

More than half of the proposal, at $240 billion, is allocated towards cutting the payroll tax. The employee side of the payroll tax is cut by 3.1% for a total cost of $175 billion; while the employer side of the payroll tax is cut by 3.1% for the first $5 million of payroll and by 6.2% for new hires and pay raises for current employees, all at a cost of $70 billion.

The next largest provision of President Obama’s proposal is spending $140 billion on public work projects and state aid. This consists of $50 billion to be spent on highway infrastructure and public transportation, $35 billion to subsidize teacher and first responder employment by state and local governments, $30 billion to state and local governments in order to “modernize” schools, $15 billion towards repurposing vacant property (basically, an urban renewal program), and $10 billion towards an “Infrastructure Bank” which would leverage private funds for public work programs.

In addition to all of the above, President Obama’s proposal allocated $49 billion toward extending unemployment benefits, while the rest of the money in the proposal is allocated toward programs such as the “jobs tax credit” for the long-term unemployed.

The payroll tax cuts for employers will reduce the cost to employers of hiring labor. This reduction in cost of hiring labor can, in turn, be expected to increase demand for labor, thereby encouraging employers to hire new workers or increase pay to current employees.

Also, by cutting the employer’s share of payroll taxes, employers will have more money to invest into growing their business. Of course, increased investment would boost aggregate demand, thereby boosting short-term economic growth. More importantly, however, is that increased investment would boost economic growth in the long run, thereby providing us with higher living standards years down the road.

The payroll tax cuts for employees will put more money in the pockets of the average person, thereby encouraging them to spend their money on consumption goods or to save/invest their money. Either of these options will boost aggregate demand, thereby increasing economic growth. Households could use the tax cut to pay down debt, which might not stimulate economic growth immediately, but by deleveraging and cleaning up household balance sheets, this could encourage economic growth in the long-run. Thus, the payroll tax cut for employees will ease any hardships that working families might be facing while stimulating economic growth.

However, there are several problems with the President’s proposal.

First of all, extending unemployment benefits is contrary to the President’s stated goal of stimulating job creation and economic growth. Extending unemployment benefits simply encourages the unemployed to remain unemployed – why work when you’re being paid not to?

Secondly, the federal government is in a precarious situation when it comes to its debt-to-GDP ratio, which is now pushing 100%, so it would not be a wise idea to pass this stimulus bill without some concrete proposals about how to reduce national debt in future years. The President is proposing to pay for the “American Jobs Act” at least partially by raising taxes. Though this is one way to pay for the jobs bill, it may not be the best way - a study coauthored by Christina Romer, who was the former head of the Council of Economic Advisors under President Obama, shows that increasing taxes by 1% of GDP for deficit reduction purposes leads to a 3% reduction in GDP. So the President’s proposal goes about paying for his stimulus bill the wrong way.

Thirdly and lastly, while paying state and local governments to keep teachers and first responders employed might make sense from an aggregate demand point of view, it is important to note that in effect it bails out state and local governments which spent profligately during good economic times. It would be better to allow those governments to suffer the consequences of their fiscal irresponsibility, in order to encourage fiscal prudence in future years.

Overall, I think that the President’s job plan does more harm than good due to the fact that a significant portion of the plan is allocated towards extending unemployment benefits and implicitly bailing out state and local governments.

Leaving the unemployment benefits and government-bailouts aside, there are better ways to utilize the approximately $450 billion in the jobs bill. Given the stated goal of stimulating job creation and economic growth, it would make sense to focus most if not all of the bill toward cutting the employer’s share of payroll taxes. This would immediately increase the demand for labor, thereby alleviating unemployment directly. This, in turn, would boost consumer demand, thereby further boosting the economy in the short-run. Moreover, as noted before, cutting the employer’s share of payroll taxes would leave more money in the hands of employers, thereby encouraging investment, which would boost long-term economic growth.

Furthermore, there are better ways of paying for this bill and reducing the deficit than raising taxes, as President Obama has proposed. The single best way to go about reducing the deficit would be to reduce transfer payments, which have no net impact on aggregate demand, such as Social Security and unemployment benefits. We could go about doing this by means-testing these programs and gradually reforming them to include personal accounts or, better yet, phasing these programs out over the long term.

Works Cited

"Obama's Job Speech: A Call to Action." The Economist. 9 Sept. 2011. Web. 25 Sept. 2011.

Romer, Christina, and David Romer. "The Macroeconomic Effects of Tax Changes: Estimates Based on a New Measure of Fiscal Shocks." American Economic Review (2010). Web.

My Thoughts on 9/22 Republican Debate

I thought the debate went fairly well... here are my thoughts:

- Rick Perry went after Mitt Romney really hard, as he has in the previous debate. This is really degrading Mitt Romney's positions, so I think he'll be losing his support now. Which is very good.

- Rick Perry's little quip calling everyone who doesn't support a law he passed which subsidized education for illegal immigrants "heartless" really showed his true colors. Combine this with Ron Paul's devastating attack against Rick Perry in the last debate, where Ron Paul pointed out that, under Perry, taxes have doubled in Texas and state debt has tripled, and you have a situation where Rick Perry's conservative and Tea Party base ought to be disappearing.

- Jon Huntsman had a really powerful moment when he got into a battle with Rick Santorum over foreign policy... Huntsman made excellent conservative points about why we need to pull out of Afghanistan and Iraq. Santorum fumbled and Huntsman received powerful applause. It truly was a very powerful moment and I think this shows that the Republican Party is slowly but surely moving towards a different approach on foreign policy...

- Rick Santorum also fumbled the question regarding the recent repeal of "Don't Ask, Don't Tell." He made social conservatives who support this position look silly. More points for those who are socially tolerant and/or liberal. Thanks, Senator Santorum. (:

- Ron Paul made some good points in the debates, as always. Gotta love the old man.

- Michele Bachmann had a weak performance, but she did make a few good points on fiscal policy. It shows that the Republican Party is moving in the right direction on issues of fiscal policy.

- Gary Johnson had a weak performance in the beginning, mainly because he was given SO LITTLE airtime, and he wasn't even asked a question about who he is, etc. etc. You'd think that the debate moderators would have the courtesy to ask Gary Johnson about his credentials and so forth, considering that this is the first debate he's qualified for, but no such question! So it felt awkward when Gary Johnson had to fit in all of his positions in response to questions about a specific issue... But Gary Johnson pushed his image of an ultra fiscal conservative, socially tolerant candidate well, AND finished strongly with that one-liner "my neighbor's two dogs create more shovel ready jobs than Obama's stimulus." That gave him a lot of positive attention from the audience and the other candidates. Hopefully, this will build his reputation and recognition among primary voters.

- Herman Cain did well, I thought. He pushed the issue of fiscal conservatism and lower taxes well.

- Newt Gingrich gave a lot of credence to all of the Republican candidates with his constant "I think everyone here will be better than Obama and has a good shot of winning" talk. This legitimizes Ron Paul and Gary Johnson to those who might be opposed to them...

Overall, I think this debate showed a strong move towards a more libertarian Republican Party.

Gary North on Getting an Econ PhD

An excellent debate between Walter Block and Gary North...