Tag Archives: fiscal cliff

Democrats have perverted tax system to hide their failures of fiscal responsibility

Republicans tell you that we have this fiscal cliff problem because the government spends too much. Democrats say the issue is tax revenues.

They’re both half-right.

Truly, the issue with the massive deficits and debt the U.S. government has created is in the very formula with which government spending arises.

In short, we’ve lost sight of why it is we have taxes.

As part of the social contract, dating back thousands of years, the people agree to give up certain freedoms in exchange for things like protection and the management of otherwise unmanageable resources.

In the old days, we had kings and fiefdoms and other monarchical, oppressive taxation systems. But then we created this thing called democracy. It was beautiful and wonderful because the people got a say.

Once a monetary system evolved and true governments came about, it became clear that in order to fund government, we’d need to pay for it somehow.

Hence the creation of taxes.

But governments, at least the U.S. government, doesn’t set up its budget based on its revenues like every other budget created by any one else for any reason whatsoever.

That’s because it controls its own revenue in the form of taxes. In other words, revenues can be whatever the government says.

This idea of “fairness” in taxation is entirely new, not to mention entirely fabricated by President Obama and the left. The government needs X dollars to function, then taxes should be Y. That’s how this system should work, it just doesn’t.

Obama’s leftist, wealth re-distribution notion that paying over a third of one’s income is somehow unfair (even though we have a progressive tax system) is inherently flawed.

That’s not how government works, nor is it how taxation ought to work.

But there are two major problems preventing us from having a system that actually makes sense. The first is that once budget allocations are made for programs, they’re nearly impossible to erase. If you spend the money, you get it again the next year, usually including a several percentage bump.

For years, the government has actually advertised for social services like food stamps because they hadn’t spent their full allocation and they were in danger of losing funding if they didn’t spend all of their allotments.

State government, for example, passes multiple-year budgets – usually biennial budgets. Taxes are based on the budget, not some arbitrary idea of fairness.

If the state has reduced its spending or increased its inefficiencies, taxes can go down. Likewise, if the state has drawn higher than expected corporate taxes or other fees, then income taxes can fall. This is happening right now in Wisconsin after Scott Walker’s brave budget lead to a (wait for it) surplus!

Property taxes work in a similar way. Local governments set budgets and then based on the value of your house, you pay a rate. It’s a progressive system that makes people with better houses pay more – usually these people are more wealthy. Everyone accepts this is how the world ought to work.

Then why doesn’t the federal government work the same way? Well, the first problem is they don’t pass budgets. The Senate hasn’t passed a budget since Barack Obama took office, so how can we possibly know how much we need? Without knowing how much spending we’re doing, we can’t know how much revenue to take in.

Likewise, our deficits are growing and our debts have burgeoned, something we don’t allow local and state governments to do. They have to have balanced budgets and their debts need to be below a certain percentage of their total revenues in a given time period.

Taxing along arbitrary lines allows the government to spend along those same arbitrary lines. It also precludes any sort of fiscal responsibility because there’s no guideline for budget-makers. That’s why, under the watch of Democrats, we have record debt, record deficits, and truly insane spending. By talking about taxing the rich, the left can obfuscate the reality that their view of taxation is an imaginary one. A canard.

There will be a resolution to the fiscal cliff, but because it won’t involve fundamental tax reform, it won’t solve anything related to our budget problems. What’s more, the Democrats admit that raising taxes on the rich won’t solve our deficit problems when 70% of those new tax dollars will go to new spending.

Democrats have no leg to stand on, no political ideology to point to when they talk about the “fairness” of the tax code because taxes are about balancing revenues and expenditures. They’ve shown no willingness to even begin to address that discrepancy and no plan they put forward can be taken seriously until that changes.

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Leftist arguments against right-to-work laws are emblematic of flawed liberal logic

Liberal ideology becomes more incoherent by the day.

Their latest crowing about right-to-work laws in Michigan are part and parcel of the degradation of the arguments in our political landscape.

Why, they’ll ask, should a worker be allowed to be a member of the union and reap all the benefits of membership without having to pay dues? That’s unfair!

You mean like the 50% of Americans who reap the benefits of being a citizen without paying taxes? That kind of unfair?

There is no argument being given by pro-union lefties as to why these laws are so painfully awful. According to Richard Hurd, a Cornell professor of labor studies, only about two-thirds of employees join a union in a right-to-work situation.

Oh the humanity.

You mean giving people the option to join a union means some people won’t do it? Remind me again how letting someone make a choice is infringing on their liberty.

When you get hired by an employer, you aren’t being hired by the union bosses, yet those bosses can force you to join a union and pay dues.

What are those dues for? Salaries of the union bosses, pensions for the union bosses and money to lobby legislators or even help fund campaigns.

Without those dues, you have fewer union bosses, smaller pensions and much less money to use for political gain. You can understand why the unionistas don’t like these laws.

According to State Budget Solutions, employment grew 8.2% from 2001 to 2010 in right-to-work states, while union states saw a .5% decrease.

Unemployment in the 23 states who have right-to-work laws is under 7%, while union states are facing nearly 9% unemployment.

Unions are part of the European model. Germany, for instance, is fine with contact unemployment in the 8% range or higher because those who are employed are getting higher wages and benefits. That’s not the way our system works, nor is it the way our system was set up to work.

But the left can’t come up with a good reason not to have right-to-work laws. They don’t want them because they think unions are the only thing preventing workers from working 20-hour days, shackled up in damp, dark, dungeons.

It’s not much different than their arguments for higher taxes on the rich. Ask a liberal to defend higher taxes on the rich and they’ll inevitably cite historical models to show how low taxes are right now. “Well under Clinton blah blah blah.”

That’s it. That’s all they’ve got.

Obama’s plan for higher taxes on the top 2% doesn’t do anything to reduce the deficit. In fact, 75% of Obama’s tax increases will go to new spending. These new revenues won’t pay down the debt and won’t spark economic growth. So what will they do? Make everyone feel better? Not when they lose their jobs.

If Obama’s economic model of massive deficits and debts amid gargantuan government spending worked, we’d have a booming economy. We don’t.

But the left is in charge and they like to wave their (rhymes with) stick around and punish those who have been successful.

Unless those people are teachers, or union heads, or actors, singers…well basically any liberal.

Liberals will fight at all costs to keep teachers’ unions in power, even while they’re bankrupting local communities, and state governments. Obama’s own right-hand man, Rahm Emmanuel, saw the destructive power of unions and their inability to stand for anything other than the greed of their own union members.

You can be in favor of right-to-work laws without being anti-union. If anything, people voluntarily joining unions actually strengthens the positioning power of that union because everyone in the union wants to be there and is more likely to be engaged as a result.

Conservatives are often portrayed as the party of tradition, of people who do things just because that’s the way it’s always been.

But liberals have lately been victims of their own ideological traditionalism. We should raise taxes because we always want to raise taxes. We should have unions because we’ve always had them and they always give us money.

Why should we give money to people who don’t serve us? Unions don’t serve union workers, they serve union heads. Taxes don’t serve the people who pay them, they serve the people who don’t.

As part of the social contract, we agree to be governed in order to gain additional liberty that the state of nature deprives us. Defense and the mediation of resources that we could not otherwise handle are the main functions of government. Anything behind that must be justified, but the left has no concept of its role as a governing party, nor any concept of what a government’s relationship ought to be with its people.

That’s why we get leaders like Barack Obama who, when the chips are down, has no coherent ideology to fall back on when trying to make decisions. That’s liberalism.

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GOP’s counter-offer in Fiscal Cliff Talks puts Obama in difficult position

After the ridiculous proposal put forth by the Obama administration concerning the so-called fiscal cliff, the Republicans returned fire with a proposal of their own.

In it, will be a proposed $800 billion in additional revenue – about half of what the president wants – and more substantive reforms to entitlement spending, although the GOP was careful not to go after any of the left’s sacred calves.

Democrats have been very clear that they would not sign any fiscal cliff policy that doesn’t increase rates on top earners, but there’s no clear evidence to support why that would be any different than other kinds of revenue outside of the fact that the left wants to punish success.

In the plan is also about $1.2 trillion in cuts including deeper cuts to Medicare than the president proposed and a change to how Social Security is calculated.

As the Business Insider points out, the plan is a legitimate compromise because the tax loop holes would disproportionately affect the wealthiest Americans, but also would give the GOP bigger cuts.

Not only is it a good sign for the negotiations given that the Republicans seemed to have backed off a more hard-line approach, or at least the appearance of one, but this plan will make it much harder for President Obama to stand firm on his insistence on raising taxes.

John Boehner and the Republicans have met President Obama exactly halfway on new revenues and the tax reform will impact top earners just like the Democrats want. The cuts to Medicare aren’t new, in fact, they’re part of the plan the White House has already outlined, the GOP just wants bigger cuts.

By approaching this from a more bi-partisan prospective – the framework is based on Democrat Erksine Bowles’ plan – Boehner has changed the playing field for the discussion.

The GOP has made it clear that they will not negotiate from the absurd position the Obama administration has taken to begin these discussions. By offering a legitimate counter to the president’s plan, Obama and the Democrats must now choose between looking like intransigent tax mongers or agreeing to change the game plan to the Republican framework.

But by giving the Republican framework a basis in a plan put forward by a Democrat, the latter is not quite as bitter a pill to swallow.

This is a rare moment, particularly in recent memory for the GOP, that the strategy and the policy are equally laudable. Hopefully it means a deal gets done, regardless of who gets to take the credit.

There is a chance, though, that it could backfire and incense the President along with his Democratic allies. Feeling cornered, the President could hold firm to his demands and allow a deal to go by the wayside until the sequester hits and politicians grow desperate allowing him to swoop in and appear the great bargainer.

For that to happen though, he’ll have to risk appearing uncompromising to start, something he’s accused the GOP of being for years. It seems more likely this will incite a brokered agreement that allows the left to cheer new revenues thanks to more tax revenue from the rich and the right to applaud austerity and entitlement reforms.

It’s a rare chance to have a political win-win.

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Obama’s non-plan for the fiscal cliff a ridiculous power play

During the Vice Presidential debate moderator Martha Raddatz asked Joe Biden what the Obama administration’s plan was for dealing with trillion dollar deficits and a burgeoning debt other than raising taxes on the rich.

His response was, “Martha thank you for asking that question brrreg….bllleeerp…dddeeerp….I think it’s really important that those who can afford to pay more do.”

Maybe I’m paraphrasing, but his answer, more or less, to what else they had besides tax the rich was tax the rich.

Not a great start.

So then, it should come as no surprise that Obama’s opening bid in the debt ceiling negotiations was utterly devoid of compromise and full of the tax raising nonsense he ran on.

Same cuts as in the budget he proposed, which didn’t get a single vote in the House it was so utterly ridiculous.

What it does have is a higher top tax rate for the rich, higher capital gains taxes and explosive increases to the taxes on dividends.

Brian Beutler of Talking Points Memo, suggested this first proposal would make the Republicans look bad because…ummm I’m not sure. The only real analysis he provides is that it now means the GOP must come up with a plan (duh), and this plan was the one Obama ran on.

(Beutler disagreed with that assessment on Twitter yesterday, but read the article and tell me who you think is right).

Business Insider took Beutler’s explanation a step further saying there was a host of things to like in Obama’s plan.

One includes giving the President the power to raise the debt ceiling whenever he wants, which apparently Joseph Weisenthal thinks is a good idea. Obama is in favor of extending the payroll tax break, which was a Republican policy to begin with.

More unemployment benefits and modest infrastructure spending. The last part seems pretty superfluous in the grand scheme of the plan because of nearly $1 trillion in spending didn’t stimulate the economy, $50 billion won’t much matter.

But the president put this plan out there knowing the GOP would laugh at it. Mitch McConnell literally laughed at it.

No entitlement reform, the top driver of our debts and deficits. Even liberals know that is true.

An onerous tax hike, particularly on investment earnings when most economists believe in a recession you ought to lower taxes on investments, particularly given how many people’s retirement money sits in 401K’s and other investment-based holdings.

National Public Radio (gasp), was on board with the potential dangers of raising taxes like this. This plan is a about as serious as a Will Ferrell movie.

Democrats know that raising taxes isn’t going to do much of anything to deal with the deficit, particularly given that only the top end will lose the tax break. It’s just something they want and the left sees this as the time to try and ram it through.

If there had been real movement on entitlement reform – just blindly wielding the budgetary axe is not reform – or a discussion about actual federal government austerity, then maybe the GOP would have reason to talk about revenues from top earners.

I see no reason why the Bush-tax cut revocation for people making $250,000 or a more can’t be accepted by the GOP, but only if it isn’t coupled with burdensome tax hikes on all sorts of other income and comes with a serious attempt to get entitlement spending under control.

This $4 trillion in supposed deficit reductions over the next 10 years is laughable when Obama has rung up $4 trillion in deficits in his four years in office. There’s no reason to believe he won’t just subvert these cuts with new spending. In fact, he almost certainly would.

Matt Yglesias lays out what could actually be a reasonable compromise that would include capping deductions on the rich and allowing Obama to move forward with his stimulus, unemployment benefits etc. Would it ever happen? Of course not, because then the Democrats feel like they lost since it wasn’t their idea (unless of course Harry Reid or a senior Democratic Senator has the stones to suggest it…unlikely)

Democrats think they have the upper hand because the Tea Party looked like the culprit in the last debt ceiling debacle. The sequester though, includes serious cuts to liberal pet programs like Head Start and AIDS funding. It also would include tax increases on the middle class, something the Democrats desperately don’t want to be responsible for.

For Republicans, the spending cuts in the sequester will be fine for many Tea Party Republicans who believe military spending already accounts for too much of the federal budget and that the Medicare and Medicaid cuts were inevitable.

Both sides have reasons to want and not want us to go off the fiscal cliff, but the plan cannot and will not look like the one Barack Obama just put forth. That plan is a non-starter with the GOP and it’s up to them to paint Obama as the one unwilling to compromise by putting forward their own plan which the country can get behind.

Obama has, in the midst of his power play, actually done the Republicans a mighty favor: he’s put the ball in their court. If the GOP can come through with a plan that actually makes sense (and that likely means raising rates on top earners, or at least creating some sort of minimum tax rate coupled with deduction caps), they’ll be able to put considerable pressure back on the president and the Senate to pass the plan.

We can’t pretend like this is a zero-sum game where either the Democrats or Republicans win and the other loses. Unfortunately that’s how the media and even the politicians themselves seem to view it. If that continues, then we all truly lose.

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Why Costco is proof the free market works: A critique of government interference

Modern American economic politics, particularly in the last 15 years or so, has morphed into a perverse and dangerous game of stock picking.

Given the economic intelligence of most politicians, particularly our last several presidents, the better analogy might be horse racing.

Government has invested heavily in certain industries. Some have grown and some have famously flopped. President Obama’s investments into Solyndra and other green companies have cost taxpayers billions. His investments in bailouts for the auto companies, particularly GM, were band-aids on what are long-term problems. General Motors still owes the government billions while a company like Ford, who had to pull its way out of the recession, is the top selling American brand in the market place.

But it hasn’t just been the Democrats. President George W. Bush put billions of dollars of subsidies into defense contractors for a war we couldn’t afford to fight. Liberals will tell you Iraq was all about the oil, although the Iraqi government has said they plan on using their oil is a bargaining chip from now on.

Even so, Bush put billions into the oil industry as well.

The idea in all of the aforementioned cases was to create growth.

The free market, though, is a funny thing. Failure actually makes the market stronger. Failure is the backbone of any economy. As Nassim Nicholas Taleb puts it, “(Organic systems) need some dose of disorder in order to develop. Deprive your bones of stress and they become brittle. This denial of the antifragility of living or complex systems is the costliest mistake that we have made in modern times. Stifling natural fluctuations masks real problems, causing the explosions to be both delayed and more intense when they do take place.”

His article, Learning to Love Volatility sets the groundwork for why a free market will function much better over the long term without government intervention.

Interfering with the market, whether it’s the stock market, monetary policy, or economic sectors, propping them up over long periods of time as we’ve done with oil subsidies, has done nothing to change the behavior of either the producer or the consumer.

Ending those subsidies, driving the price of things like gas way up, would certainly change the behavior of most people. You’d try to drive less. You’d ditch that SUV for a sedan, or at least a hybird.

Auto-makers would try harder to create technology to make cars more fuel efficient because they’d have to. Ford literally had to stop making Excursion SUV’s because they guzzled gas and no one wanted to pay $100 to fill up their tank once a week.

That’s the market at work. No government mandate would have changed things. Mandating better fuel efficiency doesn’t change consumer behavior because oil subsidies make it cheap to buy gas. If I can still buy gas for a low cost, I could care less what my gas mileage is.

Ask Chevy Volt, who has stopped production on a car no one wants to drive.

And I know the left thinks corporations are evil, but what about Costco? A New York Times profile points out that Costco marks up their retail goods at about half the rate of normal big box stores while paying their employees considerably better.

Jim Sinegal, the company’s CEO, says he knows happy workers are good workers and the same is true of customers. Although Costco is a public company, they focus more on their in-store performance than their Wall Street one.

Still, their stock is up 10% in the last year whereas Wal-Mart is down 5%. Sinegal takes a modest salary, about $350,000 a year, but with his stock options is worth more aboust $150 million.

His theory is that it wouldn’t be right for the salary disparity to be any bigger.

It isn’t benevolence, to Sinegal, it’s good business. And it is.

The best anecdote from the article is a conversation Sinegal had with Starbuck’s head Howard Schultz. Costco, Sinegal threatened, would stop carrying the coffee hegemon if Schultz didn’t lower his bean prices.

It had become public that the price of beans had dropped, which means it had become cheaper for Starbuck’s to buy their coffee, but the price of a latte or a pound of french roast hadn’t changed.

Eventually, Schultz relented and agreed to lower his prices.

There was no government intervention. No conspiracy or oligopoly or collusion. This was market forces at work.

You can bet the New York Times profile will be a bump for Costco’s business. The morality of companies has grown in importance to the market place, and for consumers that should be considered an enormous win.

It will also make the government’s job much easier because they no longer have to decide who wins and who loses. It was never their role to begin with, just one they decided to take up.

But given the expansive media landscape, access the market and access to information has never been broader. The playing field has never been so level.

The government, and that means both political parties, must learn that a free market means a free people. It should be the goal of every government and every politician to see its people free from the shackles of the economic burden that poor management from government has done a great deal to create.

Political philosophers like Thomas Hobbes would say government control can actually make us more free because in what he calls the state of nature – essentially a primeval anarchy – there is no protection for anyone.

A truly free market cannot stand. But the government-controlled market we’ve created is on its last legs. It’s time to once again let the bones of the market grow strong by standing on its own.

It’s time for government to stop picking winners and losers and let us do that. That’s our job, not theirs.

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Obama won no mandate, but doesn’t seem to care

The ideas Mitt Romney brought to the table were not new ones for the Republican Party: lower taxes, unburden businesses, get spending under control, reform entitlements, etc.

It would be easy to say this was a referendum on Republican fiscal policy. That was the platform on which Willard Romney ran and it was the platform that wasn’t enough to get him elected.

But to this business of a mandate, Obama certainly thinks he has one. He told reporters in his first remarks as president (which weren’t in a press conference. The POTUS never took questions although both Bush and Clinton did after being re-elected) that the people had decided his approach to dealing with the fiscal cliff was the way they preferred.

This, of course, is the dangerous part of elections because the candidate who wins believes the sum total of his or her ideas were codified by the electorate. Remind me again, what is Obama’s approach?

His campaign centered around an erroneous analysis of Mitt Romney’s tax plan, an attack of Mitt Romney’s wealth and business past, Big Bird and binders full of women.

So Obama’s plan, the one the electorate agreed was the right plan is…

Well, we know one part, tax the rich. This is the only plan the Obama administration has to deal with the deficit, only it’s been made abundantly clear that higher taxes on millionaires would be like taking a bucket full of water out of Lake Michigan.

Jim Treacher in The Daily Caller took the so-called mandate idea a step further and broke down Obama’s victory state by state because we have this hideous thing called the electoral college which was supposed to prevent candidates from pandering only to high population areas – so instead they pander to Ohio, Florida, Pennsylvania and Virginia.

Here is an updated set of numbers, according to the results this morning 

Florida: 73,858

Ohio: 103,481

Virginia: 115,910

Colorado: 113,099

Those four states, with a collective margin of 406,348 for Obama, add up to 69 electoral votes. Had Romney won 407,000 or so additional votes in the right proportion in those states, he would have 275 electoral votes.

As Treacher puts it, Obama basically won a margin the size of Omaha, Nebraska. How can there possibly be a mandate there?

Furthermore, in a twist of ironic fate, Mitt Romney won 48.6% of the vote. That number isn’t particularly significant, but when you consider Obama and his accomplices in the media spent weeks blasting Romney for his comments about the so-called 47%, the drama heightens.

Barack Obama promised to be the president of 100% of the nation, not just the 53% Mitt Romney says he would. Coincidently, President Obama didn’t even get to 53% and yet he’s already talking about going against the wishes of nearly half the nation.

It’s not the first time Obama told the country, “I know better than you.” Nearly 60% of the country didn’t want ObamaCare implemented and while that number has steadily dropped, it will spike again once the provisions are implemented and millions of businesses have to lay off workers or force them to become part-time employees, leaving millions of Americans in a position where they can’t afford to pay Obama’s health care tax, nor can they afford an individual plan.

Obama and the Democrats have no incentive to negotiate a “grand bargain” on the fiscal cliff because if the sequester hits, it’ll be much easier to for Congress to re-appropriate funds for the federal government than lower the tax increase which looms with no agreement.

The president has the GOP and the country by the you-know-whats and his first press conference was in indication that he plans to use his leverage to create an America in his image.

Given that he didn’t run a campaign based on what he wants that to be, we can only go on his past ideologies and policies to extrapolate forward.

If you do that, you begin to see why Obama didn’t run based on that vision; it’s a scary one.

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