October 7, 2009

Confusticated Conservatives in Congress

Why is it that Republicans and conservatives in Congress are so easy to bamboozle with Candyland promises of government largess? Honestly, it drives me nuts (which may not be that far of a trip).

Here, riddle me this: How many things are wrong in this picture?

The idea of a tax credit for companies that create new jobs, something the federal government has not tried since the 1970s, is gaining support among economists and Washington officials grappling with the highest unemployment in a generation.

The proposal has some bipartisan appeal among politicians eager both to help their unemployed constituents and to encourage small-business development. Legislators on Capitol Hill and President Obama’s economic team have been quietly researching the policy for several weeks.

“There is a lot of traction for this kind of idea,” said Representative Eric Cantor of Virginia, the Republican whip. “If the White House will take the lead on this, I’m fairly positive it would be welcomed in a bipartisan fashion.”

You see, this is why I'm loathe to support a congressman running for president: Even when he's (relatively) conservative, as is Rep. Eric Cantor (R-VA, 92%), Washington D.C. exudes a magical corruption field that sucks him into the Big Government maw... and like the Borg, assimilates him. Resistance is futile.

Here's the syllogism in a nutbag:

1. Jack up business taxes to be the highest in the civilized world. (Republicans will cheerfully help if you tell them it will "reduce the deficit!")
2. Announce highly selective tax credits for businesses who toe the federal line.
3. Bully putative "conservatives" into supporting these temporary selective tax credits -- hey, it's almost like a tax cut! -- by threatening to tell on them to their constituents. (Note: Some conservatives are already so corrupted or senile that they don't need any bullying; they bully themselves, like good "citizens of the world.")
4. Use the credits (and the threat of cutting them off) to manipulate businesses, thwart the workings of the market, and cripple Capitalism.
5. When the scheme explodes in America's face like a trick cigar, blame the Republicans in Congress who voted against it (they voted for high taxes!), the ones who voted for it (they offered amendments to the bill!), and the "previous administration." Laugh all the way to the polls.

How long do the tax credits last? Guess what: That's how long the jobs last, too. Since they're fake jobs -- by definition, a job created by a tax credit is a job that would be uneconomic without the credit -- as soon as the distorting factor (the credit) disappears, so too does the job.

You really want to create jobs, permanent jobs? Try this approach instead:

1. Dramatically reduce business income tax.
2. Repeal the capital-gains tax: We want to encourage investment, not discourage it by taxation.
3. Repeal the estate tax -- at all levels. There is no moral reason why the government should get a cut when a parent leaves money or property to a child, or an uncle to a niece or nephew, or anybody to anbody else; that money has already been taxed.
4. Meaningfully reform the tort system.

We already know that reforming the medical malpractice tort system would save the medical industry between $60 billion and $200 billion per year; taking the mean average, that's $1.3 trillion savings over ten years -- more than enough to subsidize medical insurance for the deserving poor. And that doesn't even count how much would be saved by the pharmaceutical and medical-device industries.

(Don't be misled; the big savings don't come from reducing medical malpractice judgments and settlements; that's only a small portion of the cost of "jackpot justice." The real savings come from eliminating ludicrously wasteful "defensive medicine" practices, whose only purpose is to cover the backsides of doctors in case they get sued by John Edwards.)

Now magnify that savings across the other 7/8ths of the American economy; let's say that non-medical businesses would only reap half the savings of doctors and hospitals. Even at that, a real and significant tort reform for all cases would likely save our private sector more than half a trillion dollars each and every year. That's over $5,000,000,000,000.00 in that same ten-year window. And it would still protect consumers and innocent (or not so innocent) victims.

Sorry for the digression; back to the plan.

5. Reduce government business regulation; much of it (not all of it) is really designed to drive small competitors out of competition with big corporations -- since the latter have full-time legal-compliance staff.
6. For banks and other financial corporations, get rid of mark-to-market accounting to increase reserves and free up credit; I think this may already be easing, but let's kill it off entirely.
7. Strangle Fannie Mae and Freddie Mac like Hercules throttled the twin serpents in his cradle.
8. Refrain from passing any health-care bill that includes mandates, government options, or any other intrusive government meddling.
9. Refrain from passing a huge tax on energy.
10. While you're at it, make the personal income tax completely flat -- and set it fairly low. This gives consumers more money to spend buying products. Which, you know, helps businesses that sell those products.

I guarantee this will improve the economy, get credit flowing to businesses again, ramp up consumer spending, and cause a much greater increase in hiring than would some targeted, temporary tax credits from the feds... especially since the latter will be accompanied by the hammer of massive tax increases on those same businesses.

Yeesh; why can't Eric Cantor suss this one out? This is Economics 101, for heaven's sake.

Post-Toasteed to Hot Air's rogues' gallery...

Hatched by Dafydd on this day, October 7, 2009, at the time of 5:11 PM

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Tracked on October 7, 2009 8:40 PM

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The following hissed in response by: Dick E

The above hissed in response by: Dick E at October 7, 2009 9:22 PM

The following hissed in response by: Geoman

The above hissed in response by: Geoman at October 8, 2009 11:51 AM

The following hissed in response by: Dafydd ab Hugh

The above hissed in response by: Dafydd ab Hugh at October 8, 2009 12:24 PM

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