Category ►►► Tax Attax

January 8, 2010

Obama's Jobless Relapse

Let's see...

The economy is rocky; so the Obama Administration responds by:

• Pouring hundreds of billions of dollars down the rathole of "stimulus," funneling most of it to well-heeled political cronies, ficticious accounts, and radical organizations;
• Forcing banks, financial institutions, and huge corporations to accept "bailouts" -- accompanied by nationalization;
• Piling on hundreds of new, hideously expensive government programs whose primary purpose is to buy Democratic votes by paying off special-interest groups;
• Taking over health care, looting Medicare, and engineering a socialist system, as near as makes no difference -- one that costs about $2.5 trillion that we don't have;
• Taxing the energy industry to death, making it so expensive to generate power that we just stop doing do, to prop up a dubious, unscientific thesis that has been all but disproven already;
• Pushing Unionization über Alles, regardless of how that affects job creation;
• Jacking up all other taxes, particularly on various despised industries and on the hated "rich," but with a good, healthy wallop at ordinary Americans across the country;
• Issuing -- without industry input but with the connivance of a murder of wacko, anti-capitalist groups -- a labyrinth of new, untested, and incomprehensible regulations for businesses to follow or be slaughtered by;
• And warning America that Barack H. Obama knows what more it really needs -- and he's going to give it to us, good and hard, in 2010! (Including throwing open the immigration floodgates, tearing down the wall, and heavily favoring those immigrants least likely to assimilate and become productive workers, rather than welfare hunters.)

And now the administration is shocked, shocked that unemployment remains at 10%; that real unemployment -- unemployment plus underemployment plus discouraged workers who have quit looking for jobs -- rises to 17.3%; that the deficit skyrockets by trillions of dollars; that other countries (read: Fascist China) are increasingly reluctant to lend more to a bad-risk borrower -- say, too bad there's no extraterrestrial Fannie Mae to buy our toxic asshats! -- and that every economic indicator is headed further south.

Welcome to Econ. 101.

The first principle of Obamunism appears to be "more, harder, faster!" It's almost as if Obama has accepted that he will be a one-termer, and that he'll lose most (or all) of his Democratic majority in November; so he wants to ram through as much radical leftism as possible before he becomes a lame duck next January. Maybe we can reach a tipping point where even a Republican takeover in 2010 and a President Mitt Romney in 2012 can't stop America's slide into ACORNism...

It's no wonder he's such pals with Mahmoud Ahmadinejad, Oogo Chavez, Mel Zelaya, and los bros Castro: birds of a feather, you know. Let's hope we can clip his wings -- before he flocks us all.

Hatched by Dafydd on this day, January 8, 2010, at the time of 12:05 PM | Comments (1) | TrackBack

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 | Comments (3) | TrackBack

September 25, 2009

Yes, Virginia, It Really Is a Tax

Yesterday, Sen. John Ensign (R-NV, 92%) interrogated one Thomas Barthold, chief of staff for the Joint Committee on Taxation; Ensign wanted to know whether the Internal Revenue Service was responsible for enforcing the ObamaCare provision requiring individuals to pay a "penalty" of $1,900 if they fail to purchase an "approved" health-care plan.

Why is this important? Because if it falls to the IRS to enforce that rule, then both the requirement to purchase and the penalty if you don't are indeed "taxes." Failure to pay the $1,900 penalty gets you a fine of up to $25,000.

(I'm not sure which ObamaCare plan this refers to; the House plan is the only one where a completed bill was actually voted on -- it passed in the House, of course.)

Barthold confirmed that indeed, the IRS will enforce payment of the nineteen hundred smackeroos -- and if you fail to pay it, the IRS will prosecute... and you could even be sent to jail for failing to pay, just as if you failed to pay any other tax. From the first Political post linked above:

Ensign pursued the line of questioning because he said a lot of Americans don't believe the Constitution allows the government to mandate the purchase of insurance.

"We could be subjecting those very people who conscientiously, because they believe in the U.S. Constitution, we could be subjecting them to fines or the interpretation of a judge, all the way up to imprisonment," Ensign said. "That seems to me to be a problem."

I presume the IRS will also enforce the similar provision mandating businesses, including small businesses (even Mom & Pop stores), to offer "approved" health insurance to their employees; I don't know what the penalties are for failing to do so.

In a follow-up Politico post, Barthold confirmed to Ensign that indeed, the possible penalties included jail time:

Violators could be charged with a misdemeanor and could face up to a year in jail or a $25,000 penalty, Barthold wrote on JCT letterhead. He signed it "Sincerely, Thomas A. Barthold."

The Joint Committee on Taxation has both senators and representatives (which is why they call it a "joint" committee); it's chaired by Rep. Charlie Rangel (D-NY, 100%) and vice-chaired by Sen. Max Baucus (D-MT, 80%); the committee comprises three each Democratic senators and representatives, and two each Republican senators and reps.

So the next time some chowderheaded clown -- or the president -- denies that the individual and employer mandates in ObamaCare are massive middle-class tax increases, shove this post in his face and make him read it!

Cross-posted to Hot Air's rogues' gallery...

Hatched by Dafydd on this day, September 25, 2009, at the time of 1:11 PM | Comments (0) | TrackBack

August 29, 2009

Economic Malcontentery

President Barack H. Obama and his Windy-City White House have admitted that their projected deficits were far too low, so they've upped the 10-year total to $9 trillion, more or less matching the CBO. But aren't they still playing fast and loose with their figures?

Illth care

Obama swears that ObamaCare won't add even a dime to the deficit; thus he has not included any costs from that program in his projection. But wait -- nearly every non-White House source believes it will be very expensive, costing anywhere from $750 billion to $3 trillion.

Which means, I fear, that even the expanded Obamic deficit projection is significantly low -- and we're actually looking at adding nearly $11 trillion (taking the mean average of the projection boundaries), not a "mere" $9 trillion, to the national debt by 2020.

Medicare malpractice

In addition to the problems with ObamaCare, the administration also estimates that they will save an additional $200 billion (per year?) on Medicare. According to AP:

Democrats also are calling for cuts in Medicare spending, using some of the savings to help uninsured workers. A House bill would result in a net reduction in Medicare of about $200 billion, though Obama has insisted the reductions would not cut benefits in the health program for the elderly.

Five'll get you eight that the administration is including this as "deficit reductions" in their budget estimates, since no "new government programs" have yet been enacted specifically to eat up that supposed reduction (the reductions are counted immediately; the spending won't be counted until it's actually spent).

In the event that this amazing Medicare savings (without cutting any benefits!) fails to eventuate, the deficit increases by another $200 billion -- if that alleged savings is allegedly a one-shot -- or by another $2 trillion, if it's supposedly a structural change. So the national debt rises by a total of more than $11 trillion (best case) to as much as $13 trillion (worst case).

The joy of tax

Economist John Mauldin, in his weekly e-letter, notes the following point about some of President Obama's assumptions underlying the recent budget estimate:

Instead of fiscal discipline, we are hearing increased demands for more spending. Please note that the very rosy future deficit assumptions assume the end of the Bush tax cuts at the close of 2010. But raising taxes back to the level of 2000 does not make the projected future budget deficits go away.

I mean, seriously, does anyone think Pelosi or Reid are going to lead us to fiscal constraint? Obama talks a good game, but he has not offered a serious deficit-reduction proposal, other than further tax increases. And by serious, I mean we need cuts on the order of several hundred billion dollars.

Liberal squawking notwithstanding, most of the Bush tax cuts went to middle-income taxpayers. Obama has sworn that he won't raise the taxes of anyone making less than $250,000 a year... which means he wouldn't be able to cut the Bush tax cut much at all. And even if the president proposed breaking his word on this issue ("read my lips..."), it's very unlikely that wavering members of the House and especially Senate would go along with it, since the congressional debate would have to be flooding the airwaves in 2010, swamping almost every other issue in the November elections.

So that's one assumption that appears to be busted from the git-go; who's going to vote for massive tax increases right before an election? Let's assume no significant tax increase on the middle income, including allowing the Bush cuts to die "quietly" (yeah, right -- quietly!)

So how much is the net hit on the deficit projection due to the unlikelihood of repealing the Bush tax cuts?

Mind, we're not talking about an actual deficit (if any) was created by the tax cuts; that's a whole different argument. I'm asking how much the Obama administration estimated the Bush tax cuts were costing per year, and how much of that amount they expected to recover from killing them. In other words, how much deficit reduction did they include in their calculations that they're not actually getting?

The leftist Economic Policy Institute is just the sort of econ think tank that Barack Obama would find trustworthy; it was founded by various liberal economists (including Bill Clinton's future Secretary of Labor, Robert Reich) in 1986, and it consistently presents the view from the Left. Their 2005/2006 position paper on tax cuts estimates the deficit impact thus:

In the recently completed fiscal year 2005, the combined effect of the tax cuts passed since 2001 was $225 billion without interest. When the interest costs from greater debt is included, the tax cuts raised the deficit by $260 billion, a sum that would wipe out most of last year’s unsustainable $317 billion deficit.

I wonder if they consider Obama's trillion-dollar deficits, marching into eternity, "sustainable"...

I think it reasonable to assume that the current administration accepts the estimate that the Bush tax cuts increased the deficit by at least $260 billion per year; how much do they expect to "recover" by killing the tax cuts? It would be hard for me to believe, given the urgency of the budget-deficit problem, that Obama would have low-balled the savings. I think it's not unreasonable that he would have "estimated" savings of about $200 billion per year, or 78% of what he (and liberal economists) imagine the cuts are costing the economy.

So bursting that soap-and-change bubble, adds another $2 trillion over ten years to the national debt, bringing the adjusted total increase up to $13 to $15 trillion.

Very interesting...

Finally, Mauldin quotes from economist Richard Russell:

“The US national debt is now over $11 trillion dollars. The interest on our national debt is now $340 billion. This is about at 3.04% rate of interest. In ten years the Obama administration admits that they will add $9 trillion to the national debt. That would take it to $20 trillion. Let's say that by some miracle the interest on the national debt in 10 years will still be 3.09%. That would mean that the interest on the national debt would be $618 billion a year or over one billion a day [sic; more like $1.7 billion per day -- DaH]. No nation can hold up in the face of those kinds of expenses. Either the dollar would collapse or interest rates would go through the roof.”

But Russell is assuming only nine trillion dollars added to the debt; splitting the difference, what if it's really $14 trillion, going from $11 trillion today to $25 trillion by 2020?

Under Russell's formula, an increase from $11 trillion to $20 trillion (182%) yields an increase in budgetary "debt maintenance" from $340 billion up to $618 billion, or 182%; so the equation is roughly linear.

That makes it easy to calculate with the new figures: An increase of the debt from $11 trillion today to $25 trillion -- 227% -- should result in a corresponding increase in debt maintenance from $340 billion per year to $773 billion. But wait, there's worse! A perception of increased financial risk for the United States could force us to raise the interest rates for U.S. Treasury securities, which would of course dramatically raise the interest payments on the national debt. That $773 billion could easily rise to a trillion dollars or more... just to pay the interest on the debt.

It could easily become the largest component of the entire budget, en route to gobbling up the whole thing, lock, stock, and kaboodle.

Like a spiderweb, the pieces all fall into place

Such a huge chunk of the budget going to pay mere interest on the debt will have a devastating effect on our economy (Mauldin sarcastically suggests we borrow money to pay the interest on the money we borrow). But the frustrating thing is that economists cannot agree whether such a collapse would produce massive inflation, as in a typical recession -- or massive deflation, as we had in the Great Depression. Alas, the strategies individuals should follow are completely different for each of these options: You don't want to be holding gold during deflation, for example; you want to be holding cash.

The only thing that might lessen the march towards economic collapse would be to drastically reduce spending; that means not only not enacting the rest of Obama's grandiose and delusional agenda, but actually rolling back the budget by an additional $300 to $400 billion from where it was in 2008. Such fiscal discipline would also have the serendipitous effect of keeping Treasury securities at lower interest rates, as default would be less likely in a scenario of economic responsibility.

Some kind of stimulus would almost certainly still be needed to stave off a double-dip recession; but we could do an awful lot to mitigate the damage caused by such spending by spending it more wisely. That is, Barack Obama's syllogism is simply false: It really does matter to the economy what you stimulate.

Instead of shoveling money to pet projects of liberals, if our "stimulus" included things that actually create wealth directly or indirectly, rather than just spreading the existing wealth around -- we would encourage our economy to grow. Instead of focusing on dividing the pie, focus on baking a bigger one.

What kind of stimulus am I talking about?

• Repair and upgrade of infrastructure, including water distrubution, road building, the electricity grid, and hardening our electronics against the electromagnetic pluse (EMP) effect;
• Building a bunch of new nuclear power plants;
• Dramatically upgrading and improving our border security;
• Offering low-cost loans to recent or even start-up small businesses;
• Fully privatize Social Security, Medicare, and Medicaid (paying the transition costs), and so forth.

And that is the only long-term solution to such fiscal problems: growth, growth, growth. Knowledge is being created all the time; wealth is the application of knowledge and human industry to natural resources; thus an increase in knowledge should normally trigger an increase of real wealth. As knowledge always increases, in this day of survivable recording media (the Dark Ages could not happen again), the normal state should be a continuing rise in real weath over time.

The theory is sound; it's only its application that has been wanting in recent years.

Cross-posted to Hot Air's rogues' gallery...

Hatched by Dafydd on this day, August 29, 2009, at the time of 7:27 PM | Comments (6) | TrackBack

May 14, 2009

The Raucous Baucus Max-Tax Flim-Flam Plan

Always, those in the public sector have eyed the private sector as Martians observing the Earth: "vast and cool and unsympathetic." They envy the money; gross domesic product is many times larger than the measley $3 to $4 trillion available to the feds even in the age of Obama. They envy the productivity, which puts government programs and R&D to shame. They envy the freedom of CEOs simply to make decisions -- while government bureaucrats can only write memos of recommendation and shunt them one notch up the chain of infinite regress that is the government heirarchy.

They cannot duplicate the success of Capitalism and entrepeneurship, quite naturally; those qualities are characteristic of liberty, while government is its antithesis. So as with everyone consumed by envy -- even H.G. Wells' Martians -- what they cannot duplicate they can at least destroy.

Which brings us around, by a commodious vicus of recirculation, to the Democrats and their government takeover of health care:

Senators are considering limiting -- but not eliminating -- the tax-free status of employer-provided health benefits to help pay for President Barack Obama's plan to provide coverage to 50 million uninsured Americans.

Mighty considerate of them not to offhandly eliminate it; having us that momentus favor, surely we cannot carp about a little, itty-bitty tax, can we? By the way, anent those "50 million uninsured"... the only way to reach that number is to include the huge number of young, healthy, and well-paid young workers, who voluntarily choose not to carry insurance because they think themselves indestructable.

(Thank goodness I'm finally going to subsidize them! I couldn't stand the guilt, knowing I have condemned by inaction those young adults to having to pay for what they use, just as if they were ordinary people.)

On the controversial question of taxing health benefits, [Senate Finance Committee Chairman Max] Baucus is staking out a position that could put him at odds with Obama.

The president adamantly opposed such taxes during the campaign, arguing they would undermine job-based coverage. Obama's aides now say he's open to suggestions from Congress, even if he criticized Republican presidential rival John McCain for proposing a sweeping version of the same basic idea.

Baucus said he wants to modify the tax break, not abolish it.

"We are not going to repeal it," he said.

Baucus suggested that the benefit could be limited by taxing health insurance provided to high-income individuals, although he did not specify at what income levels. He also said that plans offering rich benefits -- for example, no co-payments or deductibles -- might be taxed once their value exceeded a yet-to-be-determined threshold....

In government jargon, the tax-free status of health insurance is called the "tax exclusion."

Let's set aside the weasle words for a moment and just look at the extreme case; we can reason backwards from there. Suppose that, contrary to Baucus' (D-MT, 80%) hand-on-heart claim, he really does intend to "repeal" the "tax exclusion"... what would that mean to taxpayers?

How does it work? Your employer pays you a salary (taxed), and he also pays for your medical insurance; yes, the latter is technically "income;" but it's not really, because you have no choice in how it's spent, other than small variations that the insurance plan my allow you -- picking an HMO or a Preferred Payer Plan, for example. (The purpose of the putative tax exclusion was, of course, to encourage employers to offer such plans -- which is why nearly everybody who wants medical insurance has it today.)

Employer-provided health insurance is considered part of workers' compensation, but unlike wages, it is not taxed. The forgone revenue to the federal government amounts to about $250 billion a year.

You rich villains are stealing the government's money!

In a typical case, your employer may pay you $50,000 salary and may pay about $450 per month in health-insurance premiums; you yourself may have to pick up a smaller portion of the premium, perhaps $150 per month. That means the total payment is, let us say, $600 per month or $7,200 per year.

The employer-paid part of that ($5,400 per annum) is not taxed: The employer deducts it as a business expense and the employee doesn't have to declare it as income. If the employee itemizes his income tax (for example, if he's buying a house and wants to deduct the mortgage interest), he may be able to deduct all or part of his own share of the premiums ($1,800 per year). Thus, he doesn't have to pay tax on anywhere from $5,400 of his "income" to $7,200, depending on how much of his own payments are deductable.

Splitting the difference, he gets to "deduct" (deduct or not have to report) $6,300 from his income. Since this will clearly be a marginal deduction, it all comes out of the highest income tax he's paying (unless that drops him below the level for that tax rate). This rate is currently 35%, I believe, but the specifics are less important than the principle.

So the final tally is: The taxpayer pays $2,205 less to the government than he would were the "tax exclusion" repealed; that of course means that if it were repealed, he would have to cough up an additional $2,205 to the feds -- so that other people would get to use government-controlled health insurance for free.

Sweet, isn't it? You pay a couple grand extra per year for the privilege of having private health insurance; but if you drop it and take the government-run health care instead, you pay no extra tax. As the Romans say, "Cui bono?" Who benefits? The public sector does... at the expense of the private sector, of course: This is yet another way that ObamaCare will drive people out of private health-insurance plans and into the loving arms of Uncle Sugar.

Of course, Baucus says (yesterday) that the Democrat-controlled Congress doesn't want to completely eliminate the "tax exclusion"; they just want to levy an extra tax on some of your health-insurance premium, not all of it. So they're not actually stealing the full $2,200... just a portion.

Of course, it still means that you must pay an extra penalty for using private health insurance but not for using ObamaCare. Thus the perverse incentive for everybody to dump private insurance in favor of government-run health care remains; it's just not quite as strong as if they went the full Monte. (And who knows what they will say tomorrow? Especially as the bill-writing continues, and it becomes obvious that the numbers just won't add up.)

Democrats are trying to sell the bill as purely utilitarian:

Many experts say that Congress won't be able to come up with the kind of money needed to provide coverage for all unless limitations on the health care tax break are part of the mix.

"I don't see how you're going to put a package together ... unless you touch the exclusion," said Robert Greenstein, director of the Center on Budget and Policy Priorities, which advocates for low-income people [that is, welfare recipients].

(Note that the Center on Budget and Policy Priorities is heavily underwritten by the Democracy Alliance -- which itself is funded by George Soros and many other prominent radical lefties. Just thought you'd like to know.)

I am less and less willing to give any benefit of the doubt to this administration on any point touching politics, progressivism, liberal fascism, or attacks upon the "Right." If -- in addition to raising revenue -- a bill also tends to drive people away from a market-driven, capitalist solution and towards government nationalization of health care, I will naturally conclude that this, not revenue, is the real goal.

Some of the arguments by proponents of HillaryCare ObamaCare seem to be brazen attempts at misdirection:

Proponents of repealing the benefit say it encourages lavish health insurance plans that only add to waste in the health care system. And they argue that the benefit is unfair, since self-employed people don't get as big a tax break for health care.

First, who cares if some rich people are willing to pay through the nose for a plan that includes rhinoplasty? Evidently the Left does: They care so much, they want to repeal all differences in the level of medical care between rich and poor. Equality is so important to the bad stepchildren of George Soros that, instead of some having more than others, they would rather everybody be equally poor and equally miserable.

If carried to its logical conclusion, this "reasoning" leads to the destruction of all private property... the rich will have the money but be disallowed from spending any of it! The response by the rich would be to flee the country, quite obviously... taking all of their talent, drive, and money with them. This disincentivizes intelligence, courage, and entrepeneurship: Why bother starting up a company if you won't even be able to enjoy the increased money you might make?

And the second argument for government-controlled health care is even more specious: If it's true that "self-employed people don't get as big a tax break for health care," then for God's sake, give them a larger tax break! Don't take away the break enjoyed by ordinary, company-employed workers.

With every new day, everything about this administration and this Congress makes it more and more clear that they aim to fundamentally transform America away from what we have been for 220 years -- and turn us into something alien. This is not patriotic; this is unAmerican. This is French.

We must kill this bill before it kills us.

Hatched by Dafydd on this day, May 14, 2009, at the time of 7:14 AM | Comments (0) | TrackBack

April 16, 2009

Attended a Local Mad Tea Party

Actually, nobody appeared to be mad except for one alter kacher Obama defender (mad in both senses): When a speaker rhetorically demanded to know why bankrupting the country with a senseless spending spree is a good response to a recession, this angry, old gentleman bellowed out, "Because it worked before! In 1933! In the Great Depression! Google it!"

I asked if he could remind me -- how long after 1933 did the depression grind on, before World War II finally ended it? But answer came there none, to quote Lewis Carroll; in all fairness, Mr. Obamoid was already beetling off, perhaps frightened of such a large (300+) mob of "rightwing extremists," and he may not have heard me.

Whoops, let me back up and dress the stage. This afternoon, I drove to the nearest Tea Party, which happened to be in front of the Glendale (California) City Hall. I brought my camera along, so I shall have a nice series of photos to post in this space this evening, as soon as I finish smalling them down (they start at about 2-3 Mb, and I pare them down to about 30K-50K). Until then, keep watching the skies...

The first batch of pics

I didn't take many crowd shots; this gives you a general idea of the size of the mob. I guessed about 300 people present, but I'm not a police crowd-size estimator:

The red lines dramatically dropping in the latter half of the chart are the projections of Barack H. Obama's deficits, of course. This has been making the rounds:

There were a number of cute, hand-made signs; here's one:

The opulent, opalescent City Hall of Glendale, California, which surely must rival the Taj Mahal:

Another great sign -- a play on the signs bums hold up at freeway onramps:

Flags abounded:

She had just cut a segment with her cameraman, and they were folding up tent for the day. She was yammering away, just like a normal person... but the moment she caught sight of my camera, out of the corner of her eye, she instantly turned and beamed this perfect set of incisors at my lens.

Now you know why she is the newsbabe, and I'm just the guy who snapped her photo in my pajamas. (How she got into my pajamas, I'll never know. And don't tell Sachi!)

I don't actually listen to KABC; I think they used to have Larry Elderberry, but he has moved on now.

Hatched by Dafydd on this day, April 16, 2009, at the time of 4:12 AM | Comments (0) | TrackBack

April 2, 2009

The Great Dictator, part (C)

If you want a picture of the future, imagine an iron fist clutching a smiley face -- forever.

The first two posts of this miniseries were:

• The Great Dictator
• The Great Dictator, part Deux

We ended the last segment with a tease:

The final step of a liberal fascist takeover of the industry would be to control the wages of all employees, to be able to set them however they want.

So let's leap straight into the maw of that final eldritch horror of state capitalism, corporate socialism, or as I prefer, the Jonah Goldberg formulation: liberal fascism:

But now, in a little-noticed move, the House Financial Services Committee, led by chairman Barney Frank, has approved a measure that would, in some key ways, go beyond the most draconian features of the original AIG bill. The new legislation, the "Pay for Performance Act of 2009," would impose government controls on the pay of all employees -- not just top executives -- of companies that have received a capital investment from the U.S. government. It would, like the tax measure, be retroactive, changing the terms of compensation agreements already in place. And it would give Treasury Secretary Timothy Geithner extraordinary power to determine the pay of thousands of employees of American companies.

The author of the article, Byron York, is the former White House correspondent for the National Review; he now writes for the Washington D.C. Examiner. York describes the legislation that Chairman Barney Frank (D-MA, 100%) has approved:

The measure is not limited just to those firms that received the largest sums of money, or just to the top 25 or 50 executives of those companies. It applies to all employees of all companies involved, for as long as the government is invested. And it would not only apply going forward, but also retroactively to existing contracts and pay arrangements of institutions that have already received funds.

In addition, the bill gives Geithner the authority to decide what pay is "unreasonable" or "excessive." And it directs the Treasury Department to come up with a method to evaluate "the performance of the individual executive or employee to whom the payment relates."

There really is no other way to describe this than a fascistic economic policy, where by "fascistic" I mean corporate socialism, similar to that developed most extensively by Italian dictator Benito Mussolini. (Adolf Hitler did not invent it; he admired the economics of "Il Duce" so much, he copied them in his "Third Reich".)

Before moving further, it's important to note that fascism, while it has the stench of racism, antisemitism, and warmongering for conquest, is not strictly defined that way. An administration can be fascistic even if it has not the slightest whiff of any of those qualities. That said, however, the current administration is an open and unapologetic fan of race-based preferences; is packed to the gills with ardent foes of Israel who too often slop over into naked Jew hatred (using the code phrase "the Israel lobby"); and fecklessly threatened to invade Pakistan even before Barack H. Obama was elected; it can hardly be said to be anti-racist, philosemitic, or pacific.

The bill was actually authored by freshman Rep. Alan Grayson (D-FL, not yet rated), most famous until now for filing lawsuits against Halliburton; the fair-minded and non-prejudicial Grayson offered this unique reason for House members to vote for the bill:

"This bill will show which Republicans are so much on the take from the financial services industry that they're willing to actually bless compensation that has no bearing on performance and is excessive and unreasonable," Grayson said. "We'll find out who are the people who understand that the public's money needs to be protected, and who are the people who simply want to suck up to their patrons on Wall Street."

These are not the words of a man who has any love of the free market, individualism, limited government, or Capitalism whatsoever. I venture to say that Mr. Grayson veers perilously close to totalitarianism... and he might not even mind the label.

In a recent post, Patterico quoted Thomas Sowell's Basic Economics; Sowell hit it right on the money, as usual:

Too often a false contrast is made between the impersonal marketplace and the compassionate policies of various government programs. But both systems face the same scarcity of resources and both systems make choices within the constraints of that scarcity. The difference is that one system involves each individual making choices for himself or herself, while the other system involves a smaller number of people making choices for others.

It may be fashionable for journalists to refer to “the whim of the marketplace,” as if that were something different from the desires of people, just as it was once fashionable to refer to “production for use, rather than for profit” -- as if profits could be made by producing things that people cannot use or do not want to use. The real contrast is between choices made by individuals for themselves and choices made for them by others who presume to define what these individuals “really” need.

We must contrast the clarity, logical development, and true love of freedom found in Sowell's argument with the crabbed, self-serving, power-mad, authoritarian, arrogant, condescending, ill-informed, adolescent wish-fulfillment of Barack Obama, Timothy Geithner, Barney Frank, Alan Grayson, Squeaker of the House Nancy Pelosi (D-Haight-Ashbury, 100%), Majority Leader Harry "Pinky" Reid (D-Caesar's Palace, 70%), and every other member of the liberal cabal that wants to hijack our country and turn it into Sweden. Or into fascist Italy of the 1920s, 30s, and early 40s.

Thomas Sowell is above all an American man who loves the American experiment... while the Obamunists are from Venus, I think. Barack Obama despises everything that the United States is right now; he will only love his country when it's no longer our country, but just an extension of the EU and the UN.

But always with a smiley face. Never forget the smiley face... that's the distinction that makes one a compassionate liberal fascist, which makes all the difference.

Hatched by Dafydd on this day, April 2, 2009, at the time of 5:07 AM | Comments (4) | TrackBack

March 31, 2009

The Great Dictator, part Deux

In the Great Dictator -- which won the Watcher's Council award for non-members, only the second time we've ever managed that! -- we wrote:

But the Great Dictator of 2009 may turn out to be glib huckster from Hawaii by way of Chicago named Barack H. Obama; for the administration appears poised to enact rules that could end up completely controlling all executive compensation for every major company that has anything to do with financial matters, or is publicly held, or has any sort of requirement to report anything at all to the SEC -- even including companies that never took a dime of TARP or stimulus money.

Today, we read the following chilling report of our Childe President finding he has some new powers, hitherto unknown to be in the Constitution:

President Barack Obama asserted unprecedented government control over the auto industry Monday, rejecting turnaround plans from General Motors and Chrysler and raising the prospect of controlled bankruptcy for either ailing auto giant. Eager to reassure consumers, Obama also announced the federal government would immediately begin backing the warranties that new car buyers receive -- a step designed to signal that it is safe to purchase U.S.-made autos and trucks despite the distress of the industry.

In a statement read at the White House, Obama said he was "absolutely committed" to the survival of a domestic auto industry that can compete internationally. And yet, "our auto industry is not moving in the right direction fast enough," he added.

With his words, Obama underscored the extent to which the government is now dictating terms to two of the country's iconic corporations, much as it has already taken an ownership stake in banks, the insurance giant AIG and housing titans Fannie Mae and Freddie Mac.

In an extraordinary move, the administration forced the departure of Rick Wagoner as CEO of General Motors Corp. over the weekend, and implicit in Obama's remarks was that the government holds the ability to pull the plug on that company or Chrysler.

The New York Times gives a little more detail about the detailed level of the terms that Barack H. Obama is now "dictating" to a private company:

“And so today, I am announcing that my administration will offer G.M. and Chrysler a limited period of time to work with creditors, unions and other stakeholders to fundamentally restructure in a way that would justify an investment of additional tax dollars; a period during which they must produce plans that would give the American people confidence in their long-term prospects for success,” Mr. Obama said.

Speaking a day after the White House pushed out the chairman of G.M., Mr. Obama said Chrysler has been instructed to form a partnership with the Italian automaker Fiat within 30 days as conditions for receiving more government aid.

Now it's certainly true that GM did, in fact, suckle from the federal teat; and that of course lends at least a little legitimacy to the White House's demand for some oversight. We all know that above everything, Obama is concerned about keeping a gimlet eye on expenditures of public funds... hence his repeated tongue-lashings of George W. Bush during the 2008 campaign for having run up deficits of $100 billion, $200 billion -- once even $400 billion!

But the new Obama plan goes far beyond ensuring that GM is using its corporate welfare wisely; Barack Obama evidently believes he knows how to build and sell cars better than do GM executives. He dictates not only how much they can pay their top brass, he wants to control who that top brass will be. What's next -- will the president assert the authority to select the next CEO directly? Does the government post of GM CEO require Senate confirmation?

(Perhaps he'll pick Chas Freeman; I understand he's between jobs right now. And realistically, Freeman is no more an ignoramus about the automobile industry than he is about intelligence, his previous and now withdrawn appointment.)

Will the president begin setting prices for various models? Choosing what color options will be available? Taking over the service contract? Oh, wait, he already did that.

The final step of a liberal fascist takeover of the industry would be to control the wages of all employees, to be able to set them however they want... thus funneling workers into favored industries or even particular companies and away from others: Imagine an earmark, inserted in the dead of night during the reconciliation phase of legislation, raising auto-worker wages at plants in one state and lowered them in an adjoining state. What effect might that have on the labor market and government control of the economy? (And what a fearsome weapon to wield against Obama's political enemies! But I'm certain that aspect of wage controls has never occurred to the One.)

By a bizarre coincidence, that scheme is exactly the subject of the Great Dictator, part (C). Stay tuned...

Hatched by Dafydd on this day, March 31, 2009, at the time of 5:44 PM | Comments (2) | TrackBack

March 27, 2009

Separated at Birth - and Diverging Ever Since

Here is difference number (insert unreasonably large figure) between the private sector and government:

• During a recession, the private sector lowers prices, because the public is not obliged to buy its services.
• During a recession, government raises prices -- because the public is.

Hatched by Dafydd on this day, March 27, 2009, at the time of 3:24 PM | Comments (0) | TrackBack

March 7, 2009

I'll Take Both A and B, Patterico

Patterico published a post yesterday comparing two statements, one by Rush Limbaugh, the other by Huffington Post commentator Lee Stranahan. (Patterico titled his post "More on Limbaugh," ha ha.)

Patterico draws a parallel between the two statements -- not difficult, since Stranahan cooperated by deliberately crafting his to reflect Limbaugh's -- and our friend Patterico appears to believe he has scored a point by noting that both have the same structure (which was Stranahan's point anyway). Here's Patterico:

If I were a liberal, and if Stranahan had had a major national platform where the entire country was discussing his views, I’d want to tell him to find a different way to say what he said. Do you think it would help Democrat politicians to spend days answering questions like: “Do you also want the Iraq war to fail, like Lee Stranahan?” -- and have to spend time explaining to people that Stranahan didn’t really want soldiers to die? I’d tell Stranahan: You want to say you opposed Bush’s policies, great. Stop saying it in a way that makes it sound like you wanted troops to die. Yes, I know you don’t mean that. People will still think you do -- and frankly, you weren’t all that clear about saying you didn’t. You said it, but the implications of what you said could suggest to some that you might not have meant it....

Rush has had a major national platform where the entire country was discussing his views. As a result, I wish he’d find a different way to say what he said. I say to him: If you want to say you oppose Obama’s policies, great. Stop saying it in a way that makes it sound like you want Americans out of work. Yes, I know you don’t mean that. People will still think you do -- and frankly, you weren’t all that clear about saying you didn’t.

Anyone who bristles at hearing the phrase “You’re damn right I wanted the Iraq war to fail.” -- or who can imagine other Americans bristling at that line -- should understand what I’m saying.

I have a very different reaction than Patterico, however: I am offended by neither statement; neither makes me "bristle." I take each as a pronouncement of the core position of its speaker:

• Rush Limbaugh wants Barack H. Obama's leftist revolution in America to fail utterly, even if that means many thousands of Americans are temporarily hurt economically; Limbaugh hopes and believes this will make America stronger, so that America will become once more the "shining city on a hill" that Ronald Reagan dubbed us, spreading American-style republicanism across the globe.
• Stranahan wants America's military opposition to the militant Islamism of the Iran/al-Qaeda axis to fail utterly, even if that means many thousands of American soldiers are killed permanently; Stranahan hopes and believes this will make America weaker and more like a European country, so that internationalism will reign supreme and we have one-world government in the model of the United Nations.

What demarcates these polar-opposite worldviews is not the structure of their presentation but the substance of their philosophies; I ringingly endorse Limbaugh's and resoundingly reject Stranahan's.

I share Limbaugh's statement that he hopes Obama fails in his quest to remake America into a socialist state and remake the American citizen into the New Soviet Man... and I reject Stranahan's statement that he hopes the Iraq war fails to stop the tide of militant, fundamentalist Islamism, "jihadism," and terrorism from washing across the entire world, making America an international laughingstock and making it easier for his god, Barack Obama, to utterly transform us into antiAmerica.

I make no apology for being a partisan in that philosophical, political, and military conflict; and I'm astonished that Patterico doesn't see that we can defend Limbaugh's statement on its merits, and attack Stranahan's on its -- using as controversial language as we want -- without offending middle America or being in the least hypocritical: The two philosophies are substantively worlds apart, which is far more important to ordinary people than Stranahan's tendentiously crafted structural similarity.

Hatched by Dafydd on this day, March 7, 2009, at the time of 12:07 PM | Comments (9) | TrackBack

January 13, 2009

Only the UnAnointed People Pay Taxes

Continuing the passing parade of embarassing Obamic appointments, the One's nominee for Secretary of the Treasury, Timothy Geithner, is in a bit of hot water. As it turns out, he failed to pay thousands of dollars in self-employment tax for several years -- in the 2000s; and despite an IRS ruling in 2006, he continued to fail to pay them (plus interest and penalties) until scant days before he was nominated by Barack H. Obama, after the transition team discovered Geithner's little faux pas:

Timothy Geithner paid most of the past-due taxes days before Obama announced his nomination in November, an Obama transition official said. The unpaid taxes were discovered by Obama's transition team while investigating Geithner's background, the official said....

Geithner failed to pay self-employment taxes for money he earned while working for the International Monetary Fund from 2001 to 2003, the transition official said. In 2006, the IRS notified him that he owed $14,847 in self-employment taxes and $2,383 in penalties from 2003 and 2004.

Transition officials discovered last fall that Geithner also had not paid the taxes in 2001 or 2002. He paid $25,970 in taxes and interest for those years several days before Obama announced his nomination, the transition official said.

Geithner can hardly plead honest ignorance (as Leon Piñata might argue, when he inevitably makes some boneheaded mistake as CIA Director); Geithner has had a long career in financial circles, including fourteen years at Treasury, culminating with a three-year stint as Under Secretary of the Treasury for International Affairs; and he has been President of the Federal Reserve Bank of New York since 2003. One would think that he would have a competent accountant doing his taxes by this point... or would at least had learned how to run TurboTax, which handles SE tax quite nicely (as I know from personal experience).

Was it the late and unlamented Leona Helmsley who was reputed to have said, "Only the little people pay taxes?" I have no idea what were her politics, but she should at least be named an honorary Democrat.

In the present case, Geithner joins former Commerce Secretary designate Bill Richardson -- withdrew due to a corruption investigation he forgot to mention to anyone -- and the aforementioned Mr. Piñata, named CIA Director despite having no intelligence experience whatsoever, on the grounds that he's really good at political infighting (politicization of intelligence, anyone?)

(Of course, Obama has made a few very good appointments; but they all seem to have been appointed by George W. Bush -- and retained by the president-elect.)

You'd think that someone who has focused virtually every waking moment upon making himself president, by hook or by crook -- rather than doing anything that would actually merit his election -- would have spent at least a smidgen of that effort selecting nominees who don't have any Zoe Baird-like scandals dangling over their heads.

But of course, being liberal means never having to say you're sorry -- if anybody was inadvertently offended by well-intentioned mistakes that were made in an environment of the economic devastation and Constitution shredding wrought by eight years of the Cheney-Rove regime.

Hatched by Dafydd on this day, January 13, 2009, at the time of 3:46 PM | Comments (2) | TrackBack

December 19, 2008

The Law of Unintended Taxiquences

Well, we told you so!

The New York Times waits until after the election to drop yet another bombshell, one which may very well go unnoticed by the rest of the elite media (falling into the memory hole alongside the brief and cryptic reporting on Barack H. Obama's illegal fundraising). Under the headline "Tax Break May Have Helped Cause Housing Bubble" -- conjuring up images of yet another Bush giveaway to corporate fat cats -- we read the following:

Ryan J. Wampler had never made much money selling his own homes.

Starting in 1999, however, he began to do very well. Three times in eight years, Mr. Wampler -- himself a home builder and developer -- sold his home in the Phoenix area, always for a nice profit. With prices in Phoenix soaring, he made almost $700,000 on the three sales.

And thanks to a tax break proposed by President Bill Clinton and approved by Congress in 1997, he did not have to pay tax on most of that profit. It was a break that had not been available to generations of Americans before him.

Wow, what a great gift President Bill Clinton gave the American people! Except, half a mo... Didn't that staggering "housing bubble" have something to do with the subsequent financial collapse? Well, as a matter of fact, the Times itself now, after November 4th, is willing to admit as such:

The benefits also did not apply to other investments, be they stocks, bonds or stakes in a small business. Those gains were all taxed at rates of up to 20 percent.

The different tax treatments gave people a new incentive to plow ever more money into real estate, and they did so....

By itself, the change in the tax law did not cause the housing bubble, economists say. Several other factors -- a relaxation of lending standards, a failure by regulators to intervene, a sharp decline in interest rates and a collective belief that house prices could never fall -- probably played larger roles.

But many economists say that the law had a noticeable impact, allowing home sales to become tax-free windfalls. A recent study of the provision by an economist at the Federal Reserve suggests that the number of homes sold was almost 17 percent higher over the last decade than it would have been without the law.

Vernon L. Smith, a Nobel laureate and economics professor at George Mason University, has said the tax law change was responsible for “fueling the mother of all housing bubbles.”

Of course, this being the TImes, they quite predictably get a number of points wrong. There was no "failure by regulators to intervene;" in fact, the "relaxation of lending standards" was precisely in response to Clinton regulators interpreting the 1977 Community Reinvestment Act to require banks to make subprime housing loans to poor people who couldn't possibly afford the mortgage payments.

But they do get the basic point: When government intervenes in the market, the unintended bad consequences often overwhelm whatever good was intended. This is why economist Milton Friedman coined the phrase "the invisible foot" of government as the antiparticle to the "invisible hand" of the market.

In this case, Bill Clinton decided that homeownership was good for the country -- which it is, of course; homeowners are more firmly a part of society, so they tend to be more conservative, more productive, more stable, more responsible, and consequently raise better-adjusted kids. But Clinton went further, deciding that if homeownership was good, it was up to government to push more people into it, ready or not.

To that end, he pushed for (and the Newt Gingrich Congress gave him) a huge tax break to steer people away from other investment instruments and into real estate. When those pesky bankers got in the way, demanding standards of income and collateral and down payments that were barriers to poor people owning their own homes; so once again, Clinton decided the federal government would more or less take over the mortgage industry, using the CRA as a bludgeon.

And once again, after a feeble attempt to fight back -- remember, Republicans controlled both houses of Congress still, and could have stopped this interpretation of the CRA by vigorous opposition -- the GOP caved yet again.

The Times now thinks this government intrusion was a bad idea after all:

Referring to the special treatment for capital gains on homes, Charles O. Rossotti, the Internal Revenue Service commissioner from 1997 to 2002, said: “Why insist in effect that they put it in housing to get that benefit? Why not let them invest in other things that might be more productive, like stocks and bonds?”

Amusingly, then-Sen. Blob Dole, running against Clinton in 1996, gave a speech that appears to have precipitated Clinton's housing tax-break proposal; but Dole had actually called for an across-the-board cut in the capital-gains tax, without singling out any particular instrument over the others. (Grover Norquist agreed with Dole.) Had Clinton followed Dole's advice, we might very well not be in the current financial crisis.

But, well, here we are. At least, however, we have the enormous satisfaction of seeing the New York Times admit that a Bill Clinton domestic monetary policy was naive and foolish, and give a pretty good explanation -- after the One is safely elected -- why in future we should run our economic and monetary policy on the basis of Capitalism, not liberal fascism. (One wonders whether this new-found fiscal conservatism will ever translate into opposition to specific Obamic policy.)

Better late than never, I suppose; but even better in time than late.

Hatched by Dafydd on this day, December 19, 2008, at the time of 2:52 PM | Comments (1) | TrackBack

June 6, 2008

"What's Bad for General Motors Is Good for the DNC!"

Over at Real Clear Politics, Tom Bevan speaks for nearly all pundits, spread across three parties unto the tenth generation, when he writes:

Of course, the worse the economy gets, the better it is politically for Obama...

This is Conventional Wisdom 101. But why? What is the connection?

CW 102 explains CW 101 by postulating the following syllogism:

1. Economy heads south;
2. Voters decide to blame the "party in charge" and punish them at the polls;
3. The elite media always declare that the party in charge is the Republican Party;
4. Thus, the voters will inevitably punish the GOP (and the country) in November by voting Democratic. It's elementary!

The truly sad thing is that Democrats actually do believe this; they believe what's bad for America is good for them, because they can play "pin the blame on the elephant" and parlay some terrible catastrophe -- an earthquake, an act of terrorism, an economic challenge -- into furthering their congressional careers.

But there's something kind of weird about this syllogism... for some odd reason, whenever anything bad happens that (we are told) will earn the ire of the electorate against the party in charge -- it always seems to turn out that the responsible party is the Republican Party.

Today the voters will blame the GOP because, while Democrats control Congress, a Republican sits in the White House. But conversely, back in the 1990s, the voters blamed the GOP... after all, while a Democrat sat in the White House, it was the Republicans who controlled Congress!

I understand why the elite media would always blame Republicans for anything bad; they're knee-jerk New Left liberals who vote 93% for Democrats.

I even understand why commentators on the right so often assume voters will blame the Republicans: First, they see all the other pundits around them blaming Republicans, and if they did the opposite, they would experience cognitive dissonance; second, Republicans by their very natures tend to be dour and pessimistic... so much so that they, themselves, reflexively assume that everything that can go wrong will... and even things that can't go wrong will find a way to do so anyway.

You just watch: The closer we slide to the election, the more depressed and apocalyptic will be the Republican and conservative columnists, talking heads, and bloggers, no matter what the facts on the ground may be; the perennial pundits' pessimism and pity parade will once again take over Fox News Channel, the WSJ and the Washington Times, the Weekly Standard and the National Review, and virtually the entire dextrosphere.

In terms of Republican Party temperment (as opposed to policy), Ronald Reagan is the exception; Richard "They're coming to take me away, ha ha!" Nixon is more the rule.

But understanding a bizarre psychological syndrome of conspiracy and defeat is not the same as believing it. Here's a new syllogism that begins from my own core political belief:

1. Contrary to what the Left thinks, ordinary voters are not utter fools;
2. If the economy goes south, they will want to punish the predators and incompetents who caused it to go south;
3. Whichever party is best able to make a logical and rational argument that the economic problems are caused by the policies of the other guys will be rewarded at the polls;
4. The biggest economic problem today is the ludicrously high cost of fuel, which is driving up the price of virtually everything else;
5. The primary cause of that high cost is legislation preventing us from exploiting our own energy resources;
6. The party responsible for that legislation is the Democratic Party, not the GOP;
7. Thus if John McCain will actually articulate that argument and run on policies that would significantly increase our energy production -- something that Barack H. Obama will not, cannot do -- McCain has a very good shot at actually being rewarded by voters in November;
8. Even better, if the GOP across the board were to run on that platform in congressional, gubernatorial, and other races, it might mitigate by future-policy promises the "bad branding" that threatens to decimate Republicans once again, as it did in 2006.

The only really big "ifs" in this syllogism, I believe, are the last two points, (7) and (8). So far, neither the presumptive Republican nominee nor Republicans running for reelection has embraced the stark difference between the two parties: In general, the GOP defines success through growth and expansion -- while Democrats define their success through contraction, contrition, and condemnation of everything American.

But right now, McCain is still stuck on globaloney hysteria, while Republican congressmen running for reelection stand on the brink of accepting the Devil's bargain that the California GOP bought into long ago: Accepting permanent minority status in exchange for perpetual reelection. This is the basest of bargains: GOP incrumbents get their perks, and we get punked.

You can't recapture Congress by graciously conceding defeat -- months before the election!

Boldness is what we need now: Instead of accepting our political dhimmitude at the hands of Majority Leader Harry "Pinky" Reid (D-Caesar's Palace, 85%) and Squeaker of the House Nancy Pelosi (D-Haight-Ashbury, 93%, not counting missed votes), we must risk everything on a real campaign to take back the Congress.

The GOP needs a new national strategy, similar in some ways to the Contract With America in 1994; but that contract was entirely procedural and inside-baseball. What we need today is a substantive national strategy.

Obama has his "American Moment" speech; fine. But for those of us who want America to last more than a moment, let's have a strategy based around the theme, Vote For an American Future:

1 - Vote for American energy for America and our friends

America is an energy nation: We use a lot, but we have a lot more reserves than we're allowed by law to tap.

We need to drill for oil everywhere on American territory where oil is to be found, as well as in international waters; but we'll use American high-technology to drill in an environmentally safe and sound way.. Produce energy for America, while preserving nature's beauty for all Americans.

With oil above $130 per barrel and people feeling the pinch everywhere, we no longer have the luxury of leaving our oil fields and natural gas mines unexplored and untapped. We must drill in the Bakken oil formation, off the two coasts, in ANWR, in the Gulf of Mexico, in international waters in the Caribbean and elsewhere. We mine oil shale and extract the oil. We mine for natural gas. We begin building smaller nuclear reactors using the safest of modern designs... and the federal government should insure them.

2 - Vote for an economy of wealth, not illth

A simple rule that applies universally: You cannot tax yourself into prosperity. We need some form of taxation to pay for things we need; but we don't need taxes to "level the playing field" by crippling successful people so that life's losers don't feel so bad.

Unless we make the tax cuts permanent, they'll expire (the Democrats forced that poison pill on us)... resulting in the largest tax increase in American history. But we need to go farther: We need to eliminate the alternative minimum tax altogether, cut the capital-gains tax to zero, and shift to a "fair tax" flat tax.

And we "pay for" these tax cuts, not with more tax increases, but by actually cutting spending -- reducing entitlements (see 4 below) and trimming unnecessary government departments and agencies -- and by growing the economy, letting Americans keep, spend, and invest more of what they earn.

3 - Vote for security, not surrender

We stand at a tipping point of history: We have it in our power to destroy the Iran/al-Qaeda axis and secure not just America but the West for decades. But we need to mobilize more than just our military, brilliant as it is. This existential struggle cannot be won by bullets and bombs alone.

We need to bring together defense, diplomacy, intelligence, and the ideology of freedom in this world-wide conflict. Americans instinctively distrust "nation building;" but that makes us ideal stewards to help failed states in the "non-integrated gap" to rebuild their own nations -- with our support and know-how.

We must completely rebuild our intelligence agencies from the ground up. They have failed terribly in recent years, but not because of the men and women who work tirelessly to get inside our enemies' heads. They failed because we're asking our intelligence agencies to do things they were never designed to do; they were birthed during the great wars of the twentieth century and raised during the cold war... but this is the twenty-first century, and we're fighting an enemy we've never faced before: A world-wide death cult that wants to destroy the entire modern world and drag us all back to the seventh century.

We fight on behalf of modernity -- so we need modern, up to date, redesigned, and reenergized intelligence agencies to be our eyes and ears.

Finally, the enemy has an ideology of repression, human sacrifice, and slavery. It sounds horrible to us; but to Muslim subjects living under totalitarian tyrants, peasant tribesmen whose world is a nightmare, the promise that, if they'll slaughter the innocent in this world, they'll gain paradise in the next must sound like a bargain.

You can't fight something with nothing: We need to create an ideological counterinsurgency to fight the war of ideas with the Iran/al-Qaeda axis. We need to spread the ideology of freedom, hope, security, stability, and the rights of the individual across the hellholes of the Earth. We must give potential terrorist recruits alternatives to that dreadful path, if we're ever going to be safe ourselves.

4 - Vote for the ownership society

So-called "entitlements" are bleeding us dry. Out of the $3 trillion budget, Medicare, Medicaid, and Social Security alone account for nearly 50% of spending. This is completely unsustainable; either we find a long-term solution to out of control entitlement programs, or else we give up on America.

The problem is right in the name: "Entitlement" programs are services and money that we've told citizens they're "entitled" to extract from the government, no matter how fiscally catastrophic that is. The amount we pay each recipient increases by more than inflation every year, while the number of recipients grow as we all live longer, due to better medical care, and lead healthier lives. Add those together, and you have a prescription for disaster.

Like the intelligence agencies, entitlement programs were created during a very different era, when people didn't live much past 65. Senior citizens, the disabled, and the poor had very real problems that were going unaddressed; and these three programs and similar ones were created by Democratic Presidents Franklin Roosevelt and Lyndon Johnson out of compassion. But their compassion turned out to be based on extremely bad economics.

We don't live there anymore... so we need a new paradigm to solve the old problems. The solution is to shift retirement planning and health care for the elderly, disabled, and poor from a "hand-out" mentality to an "ownership" mentality: Turn benefits into investments, and let the very people who need them control them.

This saves money two ways: First, when you're living on other people's money, it's easy to slip into the trap of "the sky's the limit;" but when you own your own programs, you have an incentive to avoid waste, fraud, and abuse. Second, owning your own retirement program is more economical in the long run for exactly the same reason that owning your own home is more economical than renting all your life: It's an asset that appreciates.

It would save big money for the country, too. The government invests today's Social Security so badly, it barely earns interest at all; that's because the feds want to be able to loot the money at a moment's notice, so it can't be tied up in anything high-yielding.

The government must pay for every dime of retirement out of current receipts. But in an ownership society, Social Security is like a government-guaranteed 401K that earns most or even all of its own expenditures by interest paid.

So your kids (and grandkids) won't be breaking their backs supporting you; with the same SSI tax you pay now, you'll have an account that could well earn more money per year than you take out of it. Thus, no matter how long you and your spouse live, you won't run out of money... and you can even leave it to your kids as a nest egg.

5 - Vote for Capitalism, not crony liberalism and corruption

Earmarks are the corruption of ruling elite; they're personal budget items stuffed into legislation in the dead of night, often without any other senator or representative even seeing them. They pour money into the pockets of special interests, to the tune of hundreds of thousands, millions, and sometimes even tens of millions of dollars.

The recipient then kicks back some of that money to the reelection campaign of the member who pushed through the earmark. Earmarks as close as you can get to out and out bribery without being arrested.

The Republican Party has tried time and again to get the rest of Congress to eliminate earmarks altogether, but the Democrats won't do it. John McCain has refused to insert earmarks into legislation for many years now -- and his constituents know that and respect him for his principled stand.

But America simply cannot wallow in quasi-legal corruption. It brings our entire government into disrepute. Neither Republicans nor Democrats can resist the temptation to funnel millions of taxpayer dollars for a twine museum or cookbook library in their home districts... or even giving public money to local churches, including the Rev. Michael Pfleger's church in Chicago.

Earmarks to a politician are like whiskey to an alcoholic: He can't have "just one drink." The only solution is that we must do away with earmarks, root and branch. Every expenditure in a piece of legislation must go through the regular process, with all senators and representatives getting a chance to vote up or down.

When no member of Congress has the power to sneak your tax money to his own favorite business (the one that supports his reelection most heavily); when you can look on the internet and find where every dollar of your tax money went; then the citizens can regain control of their government once more.

E pluribus unum

Democrats have controlled Congress for the past two years, and they had significant veto power even before the 2006 elections. The president is not a dictator; he can only sign the bills he's sent... he can't simply make up legislation and put it into effect by decree. There is no reason to assume from the outset that everybody in America thinks every bad thing that happens is all Bush's fault -- or that every Republican running is a Bush "mini-me." Voters are not stupid; they're you and me and that feller behind the tree.

Politically, an economic downturn is going to hurt whichever party is perceived as not having a clue how to grow the economy again. The only plan the Democrats have for growing the economy is to tax us all to death.

It shouldn't be too hard to show voters that we Republicans have a better plan than "taxicide." But we have to be unified. I want to see the party develop some sort of "Vote for an American Future" contract with voters: This is what we stand for; this is where we're miles ahead of the Democrats; this is what we will do if elected. Then each GOP candidate should flesh out what exactly these points mean in terms that resonate with his own constituents.

If we do that, we'll very quickly "rebrand" the Republican Party... and we might lose hardly any seats at all.

Heck, we could conceivably even gain seats; it wouldn't take much to flip either the House or Senate back to GOP control. But if Republicans stubbornly refuse to unite; if they don't support the Republican nominee for president; if they try to run as "diet liberals," then we're going to get kicked in the stomach by Jubilation T. Jackass.

Hatched by Dafydd on this day, June 6, 2008, at the time of 6:39 PM | Comments (10) | TrackBack

June 2, 2008

Obamanomics 101

When the Democrats seized Congress in 2006, they promised, among the many promises they made -- among the seemingly millions of promises they made -- to move immediately to solve "global warming" (they hadn't yet gotten the memo about calling it "global climate change," so as to include global warming, global cooling, and global unusual stability). They swore they would reduce America's "carbon footprint." They vowed to cure the Earth's "fever" by any means necessary (a progressive term of art that means "no matter what you great unwashed, with your false consciousness, may think you want").

After two years of concerted action to surrender in Iraq, they have now turned to this particular promise. They have decided that the time for talk is over, and what we need now is action, action, action! Today, the Democrats in the Senate, having trampled underfoot a more moderate climate plan supported by John McCain and the Senate Republicans ("false consciousness!"), introduced their own draconian vision.

The proposal would cap carbon dioxide releases at 2005 levels by 2012. Additional reductions would follow annually so that by 2050, total U.S. greenhouse emissions would be about one-third of current levels.

The bill would create a pollution allowance trading system. That would generate billions of dollars a year to help people offset expected higher energy costs, promote low-carbon energy alternatives and help industries deal with the transition. Part of the $6.7 trillion projected to be collected from the allowances over 40 years would go toward $800 billion in tax breaks to offset people's higher energy costs.

These reductions "will not only enable us to avoid the ravages of unchecked global warming, but will create millions of new jobs," contends Democratic Sen. Barbara Boxer of California, who heads the Senate Environment and Public Works Committee.

But this bill is only a pale shadow of what we will have if Barack H. Obama is elected; no piker he, Obama has proposed, as part of his own energy policy, a scheme to reduce carbon emissions by 80% over the next 41 years. This would not just cripple the economy; achieving such a cut in so little time would require us to paraplegicize our economy. (I don't care if there's no such word; there ought to be.) As Sen. O. puts it on his campaign web site:

Well, I don't believe that climate change is just an issue that's convenient to bring up during a campaign. I believe it's one of the greatest moral challenges of our generation.

(I wondered whether Obama considers Islamic terrorism another of the "greatest moral challenges" of our generation; but I can't tell, because, so far as I can tell, he doesn't actually mention terrorism or al-Qaeda on his website. But there's no search function either, so I can't be certain.)

Welcome to Obamanomics: You may think that you don't want to go back to the 1940s level of energy use, but that's just pesky, old false consciousness again. Just ask Barack; he'll tell you what to think. (If you don't understand what I mean, please buy and read Jonah Goldberg's tour de force, Liberal Fascism.)

But the Democrats have discovered, to their shock and anguish, that voters might actually be more concerned about their own bank accounts than the American carbon footprint. Not only that, but Republican senators and President Bush are not the irrelevancies that Democrats, in their hubris, imagine them. For now it appears nearly certain that this bill is D.O.A.... at least for this session:

With gasoline at $4 per gallon and home heating and cooling costs soaring, it is getting harder to sell a bill that would transform the country's energy industries and - as critics will argue - cause energy prices to rise even more....

The debate on global warming is viewed as a watershed in climate change politics. Yet both sides acknowledge the prospects for passage are slim this election year.

Several GOP senators are promising a filibuster; the bill's supporters are expressing doubt they can find the 60 votes to overcome the delaying tactic. [Not to mention having to find 67 votes to override a promised presidential veto.]

The problem, of course, is in the economic details hinted at by the quotation above; can any sane, sober person read the following without lurching back a bit and saying, "What the -- ?"

The bill would create a pollution allowance trading system. That would generate billions of dollars a year to help people offset expected higher energy costs, promote low-carbon energy alternatives and help industries deal with the transition. Part of the $6.7 trillion projected to be collected from the allowances over 40 years would go toward $800 billion in tax breaks to offset people's higher energy costs.

For the innumerate, a trillion is a thousand billion; so $6.7 trillion is the same as $6,700 billion. Divided by 41 years (2009 through 2050) gives us an annual collection of "allowances" (that is, a tax on businesses and on energy sales) of $163.4 billion per year... and even that assumes that the Democrats didn't lowball their own estimate; if it's business as usual, their own internal figures probably show twice that big a tax -- $326.8 billion per year -- which will also certainly be written in such a way that it grows much faster than inflation (every tax seems to do that).

By way of contrast, the estimated expenses of Medicare Part D -- the Medicare prescription-drug benefit enacted in 2003 -- which has elicited screams of anguish not only from conservatives but even many moderates of both parties -- is a mere $36 billion per year. This brand new, carbon-rationing bureaucracy will be more than 4.5 times as large as Medicare Part D, even by the Democrats' own tendentious estimate. Under the more realistic speculation, it will be nine times as big.

But wait, not all of that $6.7 trillion dollars collected will be kept by the federal government! Heaven forbid we accuse "progressives" of wanting to tax us into oblivion: They pledge to give us "tax breaks" of $800 billion. As Sen. Barbara Boxer (D-CA, 80% -- actually 89%, if we don't count her two skipped votes last year) said, that will "enable us to avoid the ravages of unchecked global warming [and] create millions of new jobs" to boot.

Sorry, more math (arithmetic, actually): They squeeze $163.4 billion per year out of businesses -- who will pass the bill along to their customers (that's you!), of course, since the alternative is to go bankrupt; but then the same new bureaucracy will kick back $19.5 billion per year to favored clients. This will, of course, create "millions of new jobs."

Of course, they would never do this via earmarks to special interests, for Obama is an honorable man. So are Democrats all, all honorable men. And women.

(As a complete non-sequitur, did you all know that Obama earmarked $100,000 for a certain Catholic priest who has been much discussed in the news recently? According to the New York Times, "Typical of Mr. Obama’s earmarks was a $100,000 grant for a youth center at a Catholic church run by the Rev. Michael Pfleger, a controversial priest who was one of the few South Side clergymen to back Mr. Obama against Mr. Rush." I'm not sure what made me think of this...)

So by all means, rejectionist Republicans: Go ahead and boycott the election, allowing Barack H. Obama to become president by default. I'm sure our nation will be able to weather:

• Declaring defeat and running home from Iraq;
• Coffee klatches with Mahmoud Ahmadinejad (and his sock-puppet, Bashar Assad), Kim Jong-Il, Raul Castro, and Oogo Chavez -- all without any preconditions;
• The total government takeover of the health-care industry;
• A complete and mercilessly enforced ban on drilling for oil anywhere that isn't already tapped out, coupled with an energy policy that jacks gasoline prices up to $7 a gallon -- but which subsidizes windmills;
• A federal bench, including the Supreme Court, packed with lifetime appointments of clones of Ruth Bader Ginsburg and Stephen Breyer, whom Obama himself said were his favorite justices and the model of his future appointments;
• Same-sex marriage nationwide, imposed by those judges;
• And staggering tax increases on everyone, not only via repealing the Bush tax cuts but also by raising capital-gains tax and business taxes.

Would we really easily survive as a world superpower with such radical U-turns in our national policy -- all at the same time? Would we then just pick ourselves up and elect Pat Buchanan or Tom Tancredo, and all would be right with the world?

Some appear to believe so. But for the rest of us, I think it's time not just to vote for John McCain ourselves, but for each of us to resolve to get our posteriors out into the streets and work for victory.

Remember, in war and politics, you don't win by losing... you win by winning. So unless you really, really like subsisting on yams and tofu, sweltering in the summer and freezing in winter, never going anywhere beyond walking distance, and living from welfare check to welfare check, it's time to get busy and make sure this particular liberal fascist from Chicago never has occasion to move his offices a mile west, across the National Mall to 1600 Pennsylvania Avenue, NW.

Hatched by Dafydd on this day, June 2, 2008, at the time of 9:14 PM | Comments (24) | TrackBack

April 21, 2008

Gee, He Really Is Conservative - Page 1: Economics 101

Some days ago (tax extortion day) John McCain gave a speech at Carnegie Mellon University in the Pitts -- I mean, in Pittsburgh, Pennsylvania. The speech focused on his fiscal policy, taxing and spending in particular.

What was refreshingly unexpected was how fiscally conservative McCain is, particularly in comparison to the last few GOP presidential candidates... by some measures, McCain is more fiscally conservative than Ronald Reagan, who never made much of a move to rein in spending (Reagan was more concerned with winning the Cold War and lowering taxes).

Afterwards, that well-known "spending hawk," Howard Dean, chairman of the DNC lashed out at McCain, railing that the presumptive Republican nominee had no plan to "turn the economy around" (does Dean mean from generally improving to generally failing?)

So what is McCain's lousy plan that doesn't pass muster with the Dean Scream Machine? A few highlights are in order.

A taxing problem...

Here is McCain on taxes in general:

In the same way, many in Congress think Americans are under-taxed. They speak as if letting you keep your own earnings were an act of charity, and now they have decided you've had enough. By allowing many of the current low tax rates to expire, they would impose -- overnight -- the single largest tax increase since the Second World War. Among supporters of a tax increase are Senators Obama and Clinton. Both promise big "change." And a trillion dollars in new taxes over the next decade would certainly fit that description.

Of course, they would like you to think that only the very wealthy will pay more in taxes, but the reality is quite different. Under my opponents' various tax plans, Americans of every background would see their taxes rise -- seniors, parents, small business owners, and just about everyone who has even a modest investment in the market. All these tax increases are the fine print under the slogan of "hope": They're going to raise your taxes by thousands of dollars per year -- and they have the audacity to hope you don't mind.

The first salvo. No candidate since 1988 has been so Reganesque on taxes as John McCain. He even has a radical proposal of his own that starts from one of Reagan's own reforms, reducing the number of tax brackets, and carries it to the next step; but more on that anon.

The one time McCain voted against a tax cut was the George W. Bush proposal; I am convinced that he did so out of continuing anger at Bush. While this is pettiness that does not reflect well on McCain, I would sure as heck rather put up with an occasional small-mindedness than suffer endlessly under the passionate Democratic faith in a massive government funded by draconian taxes to solve all our problems.

John McCain will lower your taxes and simplify your tax returns. Both Hillary Clinton and Barack Obama will raise your taxes and vastly complexify your returns. If lowering taxes matters to you, if letting Americans keep more of their own money matters, then you can neither vote for a Democrat nor sit out the election in a snit.

We're spent!

On spending in general:

In so many ways, we need to make a clean break from the worst excesses of both political parties. For Republicans, it starts with reclaiming our good name as the party of spending restraint. Somewhere along the way, too many Republicans in Congress became indistinguishable from the big-spending Democrats they used to oppose. The only power of government that could stop them was the power of veto, and it was rarely used.

If that authority is entrusted to me, I will use the veto as needed, and as the Founders intended. I will veto every bill with earmarks, until the Congress stops sending bills with earmarks. I will seek a constitutionally valid line-item veto to end the practice once and for all. I will lead across-the-board reforms in the federal tax code, removing myriad corporate tax loopholes that are costly, unfair, and inconsistent with a free-market economy.

McCain is even stronger on spending than he is on taxes. He has the best "porkbuster" record of almost anyone; he rejects the very concept earmarks, which are the single most corrupt scheme members of Congress have ever invented precisely because it's so hard to prove the manifest bribery in a court of law.

Both Clinton and Obama oppose a ban on earmarks; they side with Squeaker of the House Nancy Pelosi (D-Haight-Ashbury, 95%) and Senate Majority Leader Harry Reid (D-Caesar's Palace, 85%), along with the most liberal spenders in the 110th Congress.

You may argue the Republicans spent like drunken sailors while they held the majority; but during that period, there were many projects that Democrats wanted but never got. Had the party of Pelosi and Reid been in control the first six years of the Bush presidency, our budget deficit would be much larger and we would be close to bankruptcy as a nation, even including the galaxy-sized tax burden they would have maintained.

John McCain will hold down spending and will veto any bill containing earmarks; the Democrats will raise spending out of sight and enshrine earmarks as the normal way to fund everything. If spending matters, you know what you must do.

They're all ears...

McCain on earmarks:

I will veto every bill with earmarks, until the Congress stops sending bills with earmarks....

I have a clear record of not asking for earmarks for my state. For their part, Senators Obama and Clinton have championed a long list of pork-barrel projects for their states -- like that all-important Woodstock museum that Senator Clinton expected Americans to pay for at the cost of a million dollars. That kind of careless spending of tax dollars is not change, my friends: It is business as usual in Washington, and it's all a part of the same wasteful and corrupting system that we need to end.

See above. We're all ears, too.

Particularly taxing...

Think McCain is all meaningless bluster? Has no concrete solutions, as Howard Dean says? Here is McCain on specific tax proposals (other than the big one -- see below):

The goal of reform, however, is not merely to check waste and keep a tidy budget process -- although these are important enough in themselves. The great goal is to get the American economy running at full strength again, creating the opportunities Americans expect and the jobs Americans need. And one very direct way to achieve that is by taking the savings from earmark, program review, and other budget reforms -- on the order of 100 billion dollars annually -- and use those savings to lower the business income tax for every employer that pays it. [Yeah, I know -- ears, ears, ears!]

So I will send to Congress a proposal to cut the taxes these employers pay, from a rate of 35 to 25 percent [Cut in the corporate income-tax rate; how likely is that to come from the jawbone of the asses in the donkey party?]....

I will also send to the Congress a middle-class tax cut -- a complete phase-out of the Alternative Minimum Tax to save more than 25 million middle-class families more than 2,000 dollars every year [Perfect pitch; the AMT, if it ever had a purpose (which I dispute), has certainly outlived it.]....

I will send to Congress a reform to increase the exemption -- with the goal of doubling it from 3,500 dollars to 7,000 dollars for every dependent, in every family in America [Kids -- those damned kids! Seriously, even the United States is skating on the edge of having too low a fertility rate to reproduce our population; incentives for people to have more children not only help directly, they send the message that America welcomes new and larger families.]....

I will propose and sign into law a reform agenda to permit the first-year expensing of new equipment and technology... to ban Internet taxes, permanently... to ban new cell phone taxes... and to make the tax credit for R&D permanent, so that we never lose our competitive edge.

And while we're on the subject of incentives, here are some good ones to encourage more technological development... which just happens to be America's forte.

John McCain will make changes in the tax law to cut the corporate tax rate, benefit parents, kill off the AMT, and support new technology. The Democrats will increase taxes, spending, and regulation of businesses. Which hand do you choose?

The great one (not Jackie Gleason)...

McCain on his big proposal, a voluntary "fair tax" option:

It is not enough, however, to make little fixes here and there in the tax code. What we need is a simpler, a flatter, and a fair tax code. As president, I will propose an alternative tax system. When this reform is enacted, all who wish to file under the current system could still do so. And everyone else could choose a vastly less complicated system with two tax rates and a generous standard deduction.

I like this proposal for several reasons, even though I'm not sure I would elect that option; I would do my taxes the old-fashioned way -- using TurboTax, I mean -- and then also using the new-fangled method... then select whichever one got us a bigger refund; time spent is less valuable to me than money saved. But here is why the "fair tax" is a spectacularly good political bombshell:

• It's a grand plan, much more transcendent than anything proposed by either Democrat (in this usage, transcendent means leaping out from the run-of-the-millstone policy-wonk proposals that pepper every presidential campaign);
• It's clearly a reform, making McCain the real reformist in the race;
• It has a huge base of popularity in all recent polls: People like it because it has the real-world effect of simplifying what is, for most people, one of the most nerve-wracking and traumatic events of an ordinary year;
• It focuses attention on an area where Republicans still command a big lead over Democrats: tax policy;
• It's something that George W. Bush never did; his transcendent plan was privatization of Social Security (well, partial privatization) -- which attracts a lot of people (those who know much about the current system and therefore loathe it), but also scares the bejesus out of even more (people who wrongly imagine the SS is a "lockbox" in which their benefits sit, which might be pried open and stolen by unscrupulous stock brokers). It's absurd, but lots of things people believe are similiarly absurd.

The only transcendent scheme proposed by either Democrat is the "Department of Peace" that Hillary Clinton lifted from Dennis Kucinich, leaving plenty of fingerprints. But since nobody knows what the heck a Department of Peace would do, other than pay the salaries of a bunch more bureaucrats, I don't think anybody cared.

McCain will score big on this one... and it has not yet been factored into the polling, as few have heard of it yet. McCain's "fair tax" plan will give Americans a choice to simplify their taxes; Democrats will fubar taxes beyond all recognition. For me, the choice could not be clearer.

You big meanie...

McCain on means-testing the prescription-drug benefit of Medicare, pushed through by George W. Bush:

Those who can afford to buy their own prescription drugs should be expected to do so. This reform alone will save billions of dollars that could be returned to taxpayers or put to better use.

This is actually far more radical an idea than it at first appears.

You all know why some programs (Social Security, Medicare, Veteran's Benefits) are called "entitlement programs," while others that seem superficially similar (WIC, food stamps, federal education grants) are called "discretionary spending"... right? Entitlement programs are those that do not depend upon the economic condition of the recipient; everyone gets the same benefit, no matter how poor or well to do he is: Thus, even Bill Gates will get Social Security and Medicare (including the prescription drug benefit), despite the fact that he is the richest man in America (at one time, richest man in the world).

Never before that I can recall has the nominee for president from one of the two major parties openly called for means testing an entitlement program. It is a huge step forward, every bit as radical a reform, though not as important, of course, as Bush's suggestion that a small part of Social Security be broken off to be privately invested.

If McCain is elected and if he can push this through Congress, we will have broken the wall of separation between entitlement and need; surely other means-testing will follow, and we might finally get a handle on the budget... which is out of control precisely because of "entitlement" spending, which goes up all by itself, rather than by discretionary spending. It might also open the floodgates for more and more complete proposals for privatizing Social Security.

McCain will attempt to means-test a piece of an entitlement program, the Medicare prescription drug benefit. The Democrats would prefer to turn all discretionary social spending into entitlement programs. There's no comparison; McCain is better on every issue than the Dems, even including immigration policy.

Church of the subprime genius...

McCain on the subprime-mortgage crisis and his solution:

These reforms must wait on the next election, but to help our workers and our economy we must also act in the here and now. And we must start with the subprime mortgage crisis, with the hundreds of thousands of citizens who played by the rules, yet now fear losing their houses. Under the HOME plan I have proposed, our government will offer these Americans direct and immediate help that can make all the difference: If you can't make your payments, and you're in danger of foreclosure, you will be able to go to any Post Office and pick up a form for a new HOME loan. In place of your flawed mortgage loan, you'll be eligible for a new, 30-year fixed-rate loan backed by the United States government. Citizens will keep their homes, lenders will cut their losses, and everyone will move on -- following the sounder practices that should have been observed in the first place. [If we must do anything at all for fools working in banks and S&Ls who lent money to people unqualified to receive such a loan -- and politically we must -- then this is the way to go about it, rather than the massive bailout of subprime borrowers and wholesale punishment of financial institutions proposed by the anti-Capitalist Democrats.]

It's important as well to remember that the foolish risk-taking of lenders, investment banks, and others that led to these troubles don't reflect our free market as it should be working. In a free market, there must be transparency, accountability, and personal and corporate responsibility. The housing crisis came about because these standards collapsed -- and, as president, I intend to restore them.

The "penalty," if you want to call it that, applied to the financiers who broke their own rules to lend out money inappropriately should be to tighten our scrutiny of them -- not fine them more of what they clearly ain't got anymore!

McCain won't freak out about the subprime "crisis" and impose some grandiose and ludicrous Keynesian control on the financial markets, as the Democrats propose. Again, unless you enjoy economic collapse as a spectator sport, you should vote for McCain over either of these two Democratic knaves.

It's a gas, gas, gas...

McCain on gas:

I propose that the federal government suspend all taxes on gasoline now paid by the American people -- from Memorial Day to Labor Day of this year. The effect will be an immediate economic stimulus -- taking a few dollars off the price of a tank of gas every time a family, a farmer, or trucker stops to fill up. Over the same period, our government should suspend the purchase of oil for the Strategic Petroleum Reserve, which has also contributed to the rising price of oil. This measure, combined with the summer-long "gas-tax holiday," will bring a timely reduction in the price of gasoline. And because the cost of gas affects the price of food, packaging, and just about everything else, these immediate steps will help to spread relief across the American economy.

If states followed suit, then gas prices would drop by a heck of a lot more than 18.4 cents per gallon; here in California, the state takes an additional 18 cents of direct tax on every gallon... but there is also the "tax" of requiring a special gasoline mix for each separate state and other enviro-wacko requirements, each of which also raises the price of gas. Altogether, eliminating federal and state gasoline taxes would save California drivers probably close to 50 cents per gallon -- a drop of $7.50 per tank for a 15-gallon tank. Assuming you get 20 mpg, that saves you a dollar for every 40 miles you drive.

The benefit may be less in some states; but it's still absurd to tax gasoline any differently than any other sale is taxed... unless the goal is to hurt truckers and commuters in particular and raise the price of nearly everything for nearly everybody (since nearly everything is driven somewhere by planes, trains, and eighteen-wheelers).

My only objection to this McCain proposal is -- the federal gas taxes go back up again after Labor Day. Dang.

McCain has already introduced a summer-long moratorium on federal gas taxes; the Democrats call for an increase in gas taxes, to punish people for driving too much. (While the Dems get chauffeured around and fly first class on commercial jets.) Want to continue driving? Vote McCain, not Hillary or Obama.

Five diamonds and a lump of coal...

Here McCain gives us five solid conservative progams -- but one clinker, the inevitable globaloney appeasement:

In the weeks and months ahead, I will detail my plans to reform health care in America... to make our schools more accountable to parents and taxpayers... to keep America's edge in technology... to use the power of free markets to grow our economy... to escape our dependence on foreign oil... and to guard against climate change and to be better stewards of the earth. All of these challenges, and more, will face the next president, and I will not leave them for some unluckier generation of leaders to deal with.

McCain has a number of other good proposals; and even on the bad policy, hysterical global fear of warming, his plan is better than theirs.

Campaigning, what is it good for?

It's good for demarcating the boundaries within which the candidate would govern. Campaign speeches tell us not only the specifics of what a candidate wants to go, but more important, the principles (or lack) by which he decides those specifics.

If a candidate's speeches are nothing but long "laundry lists" of unrelated ideas, then you can bet he is a pragmatist, a weathercock who will turn any way the wind of opportunity blows, like our previous president: Nobody listening to Bill Clinton in 1992 imagined how liberal he would govern in 1993-1994; and nobody who got used to Bill Clinton ver. 2.0 could be anything but aghast at Bill Clinton ver. 3.0, starting after Democrats lost the 1994 elections. He went from moderate DLCer to ultra-liberal Progressive to triangulating egoist without ever visibly changing his spots -- because he hadn't any in the first place; he had (and has) no discernable principles whatsoever.

Contrariwise, if a candidate's proposals all fit together into a single, coherent narrative, then that tells you he has a firm set of principles. And if that narrative has been fairly consistent throughout his career, that tells you he is steadfast, and you can rely upon him to have the same principles while governing as he does while campaigning -- for good or ill.

Note that this category applies to Barack Obama and Hillary Clinton as much as to John McCain, though I hope most readers here find that a compelling reason to vote for the last and against the first and second. They are steadfast, all right; steadfast liberal-progressives!

In this case, McCain's fiscal policies all point the same direction: Letting Americans keep more of their hard-earned money and reducing the size and scope of the federal government. If that makes any difference to you, then please don't let your angst about whether he is "pure" enough a conservative cause you to lose sight of the stark, raving differences between McCain and his two rivals.

Hatched by Dafydd on this day, April 21, 2008, at the time of 6:47 PM | Comments (18) | TrackBack

March 13, 2008

Democrats Reject "Slashing" Medicare Down to a Scant 5% Increase

Here's a fun party game: Google the following phrase: budget 2009 slash

I got 135,000 hits... how about you?

Now, there are some false hits there -- "Lawmakers vote to slash Florida budget," for example. But if you just keep clicking Next, you'll see page after page of links with titles like "Bush Budget Slashes Women's Health Funding | Reproductive Health" and "Bush's 2009 Budget Calls For Slashing Public TV Funding"... but especially ones like "Bush budget would slash Medicaid, Medicare budgets."

If they don't say "slashes," nearly all these pieces generally include some equivalent; here's a typical example, from the Associated Press today, that talks about "huge cuts" rather than "slashes":

A Republican alternative that largely mirrored a plan by McCain to permanently extend Bush's tax cuts and eliminate the alternative minimum tax was expected to fail badly, with party moderates distancing themselves from the GOP plan's huge cuts in popular programs like Medicare, housing, community development, and the Medicaid health care program for the poor and disabled. Such cuts were needed to make room for big tax cuts and still project a balanced budget.

So why the obsession with how President Bush's budget or John McCain's budget "slashes" (or inflicts "huge cuts" -- get a bandage, ow!) in "popular programs like" [fill in a series of "entitlement" programs that Americans now rely upon, after decades of "liberal fascism" under both Democratic and Republican administrations]? Why is any cut -- rather, any reduction in the rate of increase -- denounced as draconian, ruinous, and thuggish? Read on to find out...

Pay no attention to that budgetary black hole behind the curtain!

Quite simply, the inflammatory rhetoric is designed to take our minds off of the real story:

• Democrats fully intend to vastly raise taxes -- by stealth. Allowing the Bush tax cuts to expire at the end of 2010 will jack up income taxes by $683 billion over five years, or $137 billion per year. Yet even so, Democrats propose even more spending increases than the tax increases, so the deficit will explode as well, probably triggering a real, live recession (and lowering tax receipts even further).
• Democrats have no intention whatsoever of doing anything to restrain the growth of putative "entitlement" programs -- Medicare, Medicaid, and Social Security. They will allow the programs to rise at more than double the inflation rate until the cows come home to roost.
• Therefore, in fewer years than most folks realize, either Congress must enact tax increases on the level of trillions of dollars... or else the "entitlement" programs will grow to the point where they literally gobble up the entire rest of the budget. All revenues will go for entitlements, leaving nothing left over for anything else -- no more national defense, education, NASA, scientific research, or any other discretionary spending.

The Bush budget (unveiled last month) will at least "slash" the Medicare growth rate from 7.2% per year to 5% -- which is still more than inflation: Inflation has averaged 2.69% per year during Bush's presidency, but will probably rise to around 3.5% this year. This "huge cut" -- which still leaves the programs advancing more than retreating, even in constant dollars -- would trim about $10 trillion, about a third, off the unfunded liability of the program, currently estimated at $34 trillion.

But that still leaves the unfunded liabilities of Social Security, Medicaid, and other "entitlement" programs. Estimates vary, but a figure I've often seen is that all of them add up to about $75 trillion dollars... a staggering amount that equals the entire gross domestic product of the United States for 5.7 years. In budgetary terms, it represents the entire annual federal budget for a quarter century.

Unfunded liability stems from the fact that the cost of the programs rises so much faster than the inflation rate; this will only get worse as baby boomers begin to retire in mass numbers in 2011, just three years from now, and as retirees live longer and collect benefits for many more years.

John McCain has not yet proposed a serious solution to the problem, but there are quite a few very good ideas out there. I expect he will make entitlement reform the centerpiece of the domestic part of his campaign... because he has no choice. The retirement time-bomb is ticking, ticking, ticking; and neither Barack Obama nor Hillary Clinton has made -- or will make -- any serious proposal.

Social Security

There are two serious problems; eventually, Congress must fix both in order to make the program sustainable into the future:

• The return on investment (ROI) for an individual's payroll-tax contribution to Social Security varies due to a number of factors, including lifespan, how much he contributed while working, when he retired, and so forth. But the Heritage Foundation calculates that the ROI for a person born in 2006 is no more than 1%... and it can even be negative, meaning you literally pay more than you ever receive. (This is especially true for men, who tend to have shorter life expectecies than women.)

  In other words, the Social Security Trust Fund is a terrible, miserable investment. Your retirement money would do better in virtually any private investment imaginable.

  The ROI may go up if lifespan increases significantly, as I expect it will; but that means the cost of the program will again become unsustainable, since it does not generate any wealth, as a real investment would, thus cannot pay for itself over the long run.

• Even the pittance we earn on our "investment" (not much better than stuffing the money into a mattress) has been systematically raided by past Congresses, Democratic and Republican, to finance current expenses.

  There is no trust fund. There is no "lockbox." There is no money; there is only a wad of hand-scribbled IOUs.

  Social Security is a pay-as-you-go program. We paid as we went... but we also spent that money on a vast array of other "popular programs" besides Social Security, and it's all gone. C'est la vie.

Both problems can be solved by a single change... but it's going to hurt. Social Security must be fully privatized. Not the namby-pamby partial privatization proposed by President Bush (and shot down in a green-eyeshade second by the Republican Congress), but the whole kit and kaboodle. We do it like this:

Each payroll taxpayer gets an individual Social Security Retirement Account; the SSRA can be maintained by any brokerage firm, which sets up any number of SEC-approved investment funds... divided into three tiers of investment: 1 - Safe, 2 - Moderately Aggressive, and 3 - Aggressive.

All Social-Security "contributions" by a taxpayer are poured into his own personal SSRA. The taxpayer picks the tiers and the funds to invest in; when he retires, that's his own money -- to spend, to reinvest, or to pass along to his children.

And there you have it:

• The ROI is the same as for a 401K, so the SSRAs will be self-sustaining;
• And since they're in the name of the taxpayer, the government cannot raid them.

That's about the only way to permanently solve the problem -- as numerous countries have already discovered, including Argentina, Australia, El Salvadore, Great Britain, Hong Kong, Hungary, Mexico, Peru, Poland, Sweden, and many others.

The feds will have to skim off the top to partially subsidize the program for those folks who, for whatever reason, have SSRAs deemed too small to live... and also to pay the transition cost of all the past contributions by taxpayers into the current system, spread over some period of time to avoid bankrupting the country. Alas, the transition costs will be very, very high; payroll taxes will have to rise, though hopefully not damagingly so.

Such a fix would be market-positive, since it would increase America's "net worth." It's like paying to put a new roof on your house: The money you pay now will increase the value of the house for later resale by more than you put into it.

Will John McCain have the guts to propose it? I hope so; but I know for a fact that neither Hillary nor Obama will.

Medicare/Medicaid

Medicare is basically health insurance for senior citizens of any income level. Medicaid is a group of needs-based state-run (under federal guidelines) medical welfare programs for the poor, which is currently gnawing away at state economies, gobbling up 20% to 30% of state budgets.

With these entitlement programs, the real problem is the rising cost of health care itself. But the cost is being driven to a large extent by factors external to medical care:

• Medical malpractice lawsuits, which force doctors and hospitals to practice "defensive medicine," ordering unnecessary tests for the purpose of covering themselves in the event of a lawsuit.

• The vile practice in other countries (especially Canada) of legally requiring prescription drugs to be sold to their citizens below manufacturer's cost... forcing Big Drug to jack up the price here to avoid going out of business.

  (Were we to follow suit -- an idea that McCain has flirted with in the past, alas -- we would likely lose many pharmaceutical manufacturers... and all the lifesaving and life-enhancing drugs they would have produced.)

• Increasing lifespan: Just as with Social Security, when people live longer -- as they have been, due to medical advances, the decreased rate of smoking, and so forth -- the government must pay more money per person. Thus, if the taxes paid by future recipients don't rise as fast as the increased payments due to living longer, any system will eventually become insolvent.

The solution has several components. First, we need major tort reform, especially in the area of medical malpractice. The reforms must include loser pays; barring "expert witnesses" hired by the plaintiffs' attorneys (let them come from a pool hired by the court, with no financial incentive to lie); and ending the practice of expanding liability further and further outward until one finally reaches a parent company with enough money to satisfy the trial lawyer's greed.

Second, patients are just going to have to be responsible for more of their own medical costs; this will force them to budget their medical dollars more wisely. A very, very good first step is to introduce medical savings accounts (MSAs) into the Medicare system in a big way, particularly for affluent seniors. Getting fiscal responsibility into Medicaid is harder, because it is by definition a program for the poor; but we should put some thought into it.

Third, rather than pay doctors and hospitals directly, perhaps Medicare and Medicaid should pay the patient -- then let him pay the bills. If doctors charge more than the government pays, they will have to get the rest from the patient himself.

This gives patients a huge incentive to shop around and think twice about going to the doctor for minor problems; and it likewise gives doctors a huge incentive to reduce costs by bringing the free market into the equation. At the moment, they simply get paid according to a government "schedule"... which encourages medical professionals to spend money on lobbyists to increase the scheduled payment rates, rather than on finding ways to contain their own costs and remain competitive, as every other business must do.

Fiscal responsibility

If Republicans want to regain control of Congress someday -- and if John McCain wants to get elected president -- then both must offer bold, permanent solutions to the entitlement crisis. There is no more time for tepid "can-kicking."

Even if the Democrats shoot down the GOP proposals, that will give us a vital and future-oriented issue to run on, buttressing our claim to be the party of great new ideas. And this issue will be one that clearly differentiates between the European-style socialism of the Left and the American tradition of personal responsibility on the Right.

Let's hope that if the GOP can ride this issue back into power (this election or the next), that this time, the reality of Republican governance will actually live up to the stirring rhetoric of personal responsibility.

Hatched by Dafydd on this day, March 13, 2008, at the time of 8:14 PM | Comments (3) | TrackBack

December 19, 2007

And One More for the Road

On the final day of the first session of the 110th Congress, before the Democrats got out of town, they managed to squeeze in one more humiliation at the brawny hands of George W. Bush:

Congress on Wednesday gave final approval to a plan that will spare millions of middle-class taxpayers higher tax bills for 2007. The White House welcomed the development and said President Bush would sign the bill.

The tax reprieve postpones for one year only an expansion of the alternative minimum tax, a parallel tax system enacted in 1969 to prevent very wealthy investors from using deductions and tax shelters to avoid paying income tax altogether. The alternative tax has ensnared a growing number of middle-class Americans in recent years because the 1969 law was not indexed to inflation....

House Democrats angrily approved the bill after giving in to demands by Congressional Republicans and Mr. Bush that the tax cut not be offset by raising other taxes. Democrats started the year by pledging to make up for the $50 billion tax fix with cuts in spending or increases in taxes elsewhere.

Cave City, here they come...

But listen to this amazingly maudlin whine and cheese party from the Reality-Based Community:

The Democrats repeatedly tried to get Senate Republicans to back a plan that would have imposed new taxes, particularly on wealthy hedge fund managers, but the Republicans refused. Because the lawmakers did not offset relief from the alternative tax, the national debt will increase by $50 billion.

“The only reason this bill is not paid for is because Republicans almost in lock step in both bodies have prevented us,” said Representative Steny H. Hoyer of Maryland, the majority leader, in one of several furious speeches by Democrats on the House floor.

“We are forced today to recognize that we don’t have the votes to pursue the pay-as-you-go principle that we adopted in a bipartisan fashion,” Mr. Hoyer said. “I regret this day and this bill.”

I reckon this never occurred to any of those lapsed members of Taxaholics Anonymous. They should be reading Big Lizards.

Hatched by Dafydd on this day, December 19, 2007, at the time of 9:35 PM | Comments (10) | TrackBack

December 18, 2007

Lame Duck Crushes Christmas Turkeys

I started this post last Thursday; but then I decided to hold it until I saw whether the predictions by the Washington Post and the New York Times would hold. They came through today... so here's the hodgepodge result combining the ancient past (Thursday the 13th of December) and the distant present (Tuesday the 18th). You'll take it, and you'll like it, by God and my right arm!

President George W. Bush -- dubbed irrelevant by congressional Democrats after they won a massive 15-seat majority in the House and an even more massive 2-seat majority in the Senate in 2006 -- has just won his 2,337th confrontation with the hapless Democrats this year. This time, it was on the Democrats' tax and spend and tax bill:

House Democratic leaders yesterday [that is, last Wednesday the 12th] agreed to meet President Bush's bottom-line spending limit on a sprawling, half-trillion-dollar domestic spending bill, dropping their demands for as much as $22 billion in additional spending but vowing to shift funds from the president's priorities to theirs.

The final legislation, still under negotiation, will be shorn of funding for the war in Iraq when it reaches the House floor, possibly on Friday. But Democratic leadership aides concede that the Senate will probably add those funds. A proposal to strip the bill of spending provisions for lawmakers' home districts was shelved after a bipartisan revolt, but Democrats say the number and size of those earmarks will be scaled back....

The agreement signaled that congressional Democrats are ready to give in to many of the White House's demands as they try to finish the session before they break for Christmas -- a political victory for the president, who has refused to compromise on the spending measures.

That bill was passed, but not last Friday as expected; the Democrats had to put out some intramural brush fires first. They passed the same legislation today... minus the Iraq-war funding, as the Post predicted:

Lawmakers then voted 206-201 to add $31 billion for military operations in Afghanistan, but the bill includes no money for the war in Iraq. The Senate, as early as today, is expected to add $40 billion for Iraq. The bill would then return a final time to the House.

But here is my favorite part of the Los Angeles Times story... where Rep. Steny Hoyer (D-MD, 90%) complains about being whipsawed by the president:

"In the face of an intransigent president and his allies in Congress, this legislation is the best we can do for the American people," said House Majority Leader Steny H. Hoyer (D-Md.).

Thank God for intransigence!

Strangely, President Bush has more clout today, with a Democratic congress, than he did in 2004-2006 with a Republican one. But there is actually a very good explanation for that oddity.

When the Republicans were running Congress, Bush was constrained against using his most potent weapon, the veto: Bush, far more than congressional Republicans, follows Ronald Reagan's 11th commandment -- "Thou shalt not speak ill of fellow Republicans" -- and it would be a terrible insult for a Republican president to veto legislation approved by a GOP Congress.

This was unfortunate and politically catastrophic, because spending under the 109th Congress, and the 108th before them, rose out of control -- though not as fast as if the Democratic proposals had been adopted instead. I believe this was even more the cause of the 2006 defeat than the Iraq war, probably second only to the hot e-mails to pages by former Rep. Mark Foley of Florida.

A threat by a Republican president to veto Republican legislation would have produced a miracle of financial rectitude: As much as Bush did not want to humiliate them, they were even more anxious not to be humiliated. Thus, the mere threat could possibly have reined in the spending... and possibly even saved the GOP majority.

In another example of how the power of the veto can win friends and influence members of Congress, Senate Democrats -- desperate to get out of town before Christmas to do some campaigning, fundraising, and heavy partying -- gave away the store on the energy bill:

The legislation still includes a landmark increase in fuel-economy standards for vehicles and a huge boost for alternative fuels. But a $13 billion tax increase on oil companies and a requirement that utilities nationwide produce 15 percent of their electricity from renewable sources were left on the floor to secure Republican votes for the package.

The tax measure and the renewable electricity mandate were included in an energy bill that easily passed the House of Representatives last week. But industry lobbyists focused their attention on Republican members of the Senate and on the White House, which repeatedly threatened to veto the bill if the offending sections were not removed. Earlier in the week, Senate leaders agreed to drop the renewable electricity section.

And on Thursday, after a failed effort to cut off debate on the bill, Senator Harry Reid of Nevada, the Democratic leader, announced that he would reluctantly remove the tax provisions as well, clearing the way for passage by a vote of 86 to 8.

That same bill was also passed by a wide margin (314-100) in the House today, having already been passed by the Senate; and it goes now to the president's desk. (The reason that both majorities are veto proof, of course, is that Bush himself approved the compromise.)

The only disappointment was that the Democrats managed to strip all support for new nuclear power plants from the energy bill:

Nearly half of House Republicans, meanwhile, condemned the legislation as a " No Energy Bill," because it lacked expanded access to new oil and gas exploration and failed to include incentives for development of coal or nuclear energy.

"For all the conventional energy sources that fuel this great nation, this is basically a no-energy bill," said ranking member of the House Energy and Commerce Committee, Rep. Joe Barton, R-Texas.

But even there, Bush beat them like naughty children... because support for the nuclear industry has instead been inserted into the House omnibus spending bill just passed:

But they were not the only ones unhappy with the final product. In their struggle to meet White House demands while preserving some of their priorities, Democratic leaders made changes to their initial spending bills that seemed to anger everyone. Environmentalists were annoyed by a provision allowing the Energy Department to guarantee loans to energy companies for the development of liquid coal and nuclear projects that otherwise could not receive bank financing.

"This is the mother of all gift cards to the nuclear and coal industry," said Anna Aurilio, Washington director of Environment America.

Last, but not least in the least, the Democrats have finally caved on the awful expansion of SCHIP, the State Children's Health Insurance Program. SCHIP was originally intended, when enacted in 1997, to offer health insurance to impoverished children; and it was sunsetted to expire in ten years... which means in less than two weeks.

But rather than simply reauthorize it, the Democrats boldly chose to vastly expand it (from $25 billion to $60 billion over the next five years) -- and also to extend the program to middle middle- and upper middle-income kids who already have private insurance, but would likely switch to the cheaper government-subsidized plan; and even to expand the State Children's Health Insurance Plan to upper middle-income adults. This would have been a "great leap forward" to government-run health care, and it will certainly be the cornerstone of a Hillary Clinton campaign, should she win the nomination.

Bush vetoed the legislation; the veto was overridden in the Senate, but the House failed by 13 votes, even though 44 Republicans joined with the Democrats. In response, the Democrats made some cosmetic changes and repassed essentially the same bill (only Yog Sothoth, the Lurker at the Threshold, knows what they were thinking).

But when Bush vetoed the bill for a second time (couldn't see that coming!), House and Senate Democratic leaders chose not to try to override: They knew it would fail by an identical margin, since it was essentially the same bill. Instead, they have dropped their planned expansion and accepted a 15-month extension of the current program:

But Democrats fell just short of a veto override [the first time], and as the end of the session [and Christmas] approaches, they have agreed to an 15 month extension of the existing program, with extra money added only to cover state budget shortfalls, according to House and Senate aides. If the deal holds, the Senate would vote first on the program's extension, followed by the House.

Even with this long-term extension, Democrats aren't letting go of SCHIP as a political issue. They are planning a Jan. 23 veto override vote -- just days before President Bush gives his final State of the Union address.

The Democrats may get a shock on January 23rd. The two primary purposes for Democrats to vote for the SCHIP expansion were first, to push us towards government-run health care, and second, to embarass the president and conservative Republicans by making them appear to vote against healthy kids. Thus, it makes perfect sense to them to try to override the second veto in January ("just days before President Bush gives his final State of the Union address"!)

Contrariwise, the primary reason that many Republicans voted with the Democrats to override the veto was the fear of being painted as anti-child if they allowed SCHIP to die. I doubt that most thought the expansion was a good idea, even while they voted for it.

But in January, when the Democrats try to override again, GOP members of Congress will have no incentive to join them... because a deal will already have been struck to ensure that poor kids continue to get health insurance past the next election.

Contrariwise, Republicans will have every reason to oppose a purely symbolic vote whose only purpose is to embarass their fellow Republicans, whose support will be needed in November. I suspect this veto-override attempt will attract a lot fewer Republicans than the last one did, when the future of the SCHIP program itself was on the line; and it will be the Democrats, not the Republicans, who are humbled: The vote in January will be purely a vote to expand SCHIP, not to continue it; the veto override may well get no Republican votes at all.

So first the Democrats caved two or three hundred times on Iraq; then they caved on the huge spending increases they wanted; now they cave on the draconian tax increases they wanted to slap onto the "excess profits" of the oil industry; and they're just about to fully cave on their latest foray into government-run health care. Bush just ran the table.

As the title says, the "lame duck" president crushed the Democratic Congress so anxious to get the hell out of Dodge in time to raise money, run for reelection, and party like it's (still) 1999 (generally, Democrats manage to combine all three into a single event). The power of the presidency -- and the genius of the Founding Fathers' demand for a strong executive -- is thus reaffirmed.

Hatched by Dafydd on this day, December 18, 2007, at the time of 7:18 PM | Comments (6) | TrackBack

December 6, 2007

Alternative Minimum Tax: May We Make a Suggestion?

The United States Senate appears to have hit an impasse on fixing the Alternative Minimum Tax (AMT), which lunges up out of its grave every year, skeletal hands clutching and grabbing, threatening to snatch thousands of extra dollars from average Americans' pockets:

A bill that would protect millions of middle-class taxpayers from being hit with a surprise tax increase over the next several months stalled in the Senate today, creating more confusion as filing season approaches.

The bill, intended to stop the alternative minimum tax from ensnaring more and more Americans, was supported by only 46 senators — 14 short of the 60 needed to shut off debate and move to a vote on the bill itself.

Anybody who has ever been gobsmacked by the AMT knows exactly what it is: It's an IRS punishment for falling into any one of number of obscure (but widespread) categories of taxpayer, including having too many children, living in a state with high state income taxes, or owning in whole or part an incorporated business, large or small -- such as a family farm or convenience store.

The AMT was first enacted in the Tax Reform Act of 1969, in a mean-spirited attempt to prevent rich people from taking advantage of the tax breaks that Congress itself had enacted or would enact in the future. "How dare you Bertie Woosters use completely legal means of sheltering your money from taxes!" exclaimed the 91st Congress, with its 57 to 43 Democratic majority in the Senate and its 243 to 192 (56% - 44%) Democratic majority in the House; "We'll just rescind your rights by setting an absolute minimum you must pay."

Under the AMT, if you fall into one of the dreaded categories, and if your income tax would otherwise be less than 26% of your adjusted gross income, then your tax is simply jacked up to 26% of the gross... and to hell with your legal right to declare expenses, exemptions, or deductions. (For some taxpayers, the magic number is an even bigger 28%.)

The AMT was originally touted as a way to sock it to millionaire "coupon-clippers," the "idle rich" who simply lived off of the interest from their investments (like Sen. Ted Kennedy, D-MA, 100%). But in a sneaky bit of legislative legerdemain, the Democratic 91st Congress accidentally forgot to index the AMT to inflation... so every year, more and more middle-income taxpayers find themselves subject to its significantly higher income-tax requirements:

For the 2006 tax year, nearly four million people were subject to the alternative minimum tax, including half of all taxpayers with incomes of $200,000 to $1 million, and 5 percent of taxpayers with incomes of $100,000 to $200,000. Without any change, the tax is expected to hit as many as 23 million taxpayers at an average cost of $2,000, reaching people with incomes as low as $30,000 to $50,000, depending on circumstances.

So what's gumming up the works? Easy to explain: The Democrats have made a solemn "pledge" of sorts, which they tout as demonstrating their fiscal restraint, not to cut taxes for one bloke unless they simultaneously raise taxes on some other bloke, by at least as much as the tax cut (a net raise is all right).

In other words, Democrats have pledged never to cut our taxes overall; every tax cut must be "paid for" by a corresponding tax increase. Democrats stand foursquare against greedy taxpayers stealing the government's money via tax cuts.

By contrast, Republicans have pledged not to raise taxes on anyone. Ergo, any plan acceptable to the Democrats is rejected by the GOP, and vice versa.

The current scheme -- which would "pay for" the AMT tax cut by raising taxes on private equity funds, hedge funds, and partnerships, which are generally used by evil rich white people -- was supported by 44 Democratic senators, plus Independent-Democrat Joe Lieberman (CT, 75%) and Independent-Socialist Bernie Sanders (VT, not yet rated). 48 Republican senators voted against it (everyone but John McCain, AZ, 65%). All five of the presidential candidates who are senators of either party found occasion to be absent for the vote; and Majority Leader Harry "Pinky" Reid (D-Caesar's Palace, 90%) voted against it, just to be able to bring it up again under the arcane and occult Senate rules.

But Big Lizards has a suggestion that will resolve this entire mess. No, really. It's a solution so simple and obvious, we're convinced it won't cross the mind of a single representative or senator...

Indexing the AMT is expected to drop federal revenues by $50 billion for FY 2008; the Democrats say they don't want to raise the budget deficit by that much (though they don't seem to mind raising it for other reasons, such as socialized medicine), but the GOP says those taxes were never meant to be collected in the first place and mustn''t simply be shifted onto someone else's shoulders.

So fine. Why not just cut $50 billion in spending from the anticipated $2.9 trillion federal budget? That's a trim of just 1.7%... which doesn't seem so terribly out of reach. Even if we exempt the $717.6 billion in spending related to the military, the war on global hirabah, veterans' affairs, and NASA, that still leaves cutting the remaining $2.18 trillion by only 2.3%. We can achieve that goal by cutting all other budgets by 2.3% across the board, or by mandating the cut by department and allowing each department head to pick his own victims.

Republicans should be happy, because we're not simply robbing small investors to pay people with a lot of kids who live in California. And I'm sure Democrats will be ecstatic over the spending cut, because, as they say, they're only thinking of is fiscal responsibility!

All right, problem solved. See how easy that is -- assuming one isn't a member of Congress?

Hatched by Dafydd on this day, December 6, 2007, at the time of 2:24 PM | Comments (4) | TrackBack

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