Category ►►► Tax Attax

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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