Heads and Tails: Headlines

Thought you might like me to sum up some headlines from the past few days.  I'll present them using a heads/tails format.

Heads:  California seeks bridge loan to pay bills (they're broke, by the way).
Tails:  Governor of California signs DREAM Act allowing illegal immigrants to receive college loans.

Heads: President Obama issues televised speech deploring the House and Senate to compromise on a budget bill to prevent default on US debt.
Tails: President Obama says he will veto any compromise bill from the Republicans that passes the House and the Senate.

Heads: Politicians from San Francisco argue for Gay rights across America.  People should be free to choose their lifestyle and not be punished for it.
Tails: San Francisco bans Happy Meals because they aren't good for you, or you just don't know any better.

Heads: "A key component of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) enforcement mission is the tracing of firearms on behalf of thousands of Federal, State, local and foreign law enforcement agencies." (www.atf.gov/statistics) The ATF just offered $3000 as a reward for information leading to the arrest and conviction of those persons responsible for a burglary and theft that occurred in Pryor, Oklahoma.
Tails: Federal agents of the ATF can not account for more than 1,000 firearms smugglers bought...from ATF agents!! (Sorry, had to include exclamation marks on this one--Operation Fast and Furious.  Just Google and prepare to weep...the family of the border officer killed by one of these guns is.)

Heads: We should not jump to conclusions about whether Nidal Malik Hassan's faith had anything to do with him shouting "allah akhbar" before gunning down 13 people, nor of the Times Square bomber Faisal Shahzad.  We should not jump to conclusions about whether religion had any motivation in these terrorist acts.
Tails: In Oslo, ABC details that the police are questioning the "Right-Wing Christian" over the weekend massacre.  Washington Post "On Faith" contributor blames Christianity for Oslo bombing and shootings with an article titled, "When Christianity Become Lethal."

Heads: In a speech to La Raza ("The Race") President Obama makes "joke" about wanting to change laws by bypassing Congress, but adds, "but that's not how our system works."
Tails: Military action continues in Libya, with US forces providing direct and indirect support.  President Obama said that he doesn't need Congressional authorization to use the military in Libya.



It is...to weep.  I'm turning off the news, and watching some Sponge Bob with my daughter.  

Economics From Mankiw

There has been a lot of discussion recently about a "balanced" approach to our debt problem.  You know, some cuts...but some tax increases, too.  I am not a follower of the "balanced" approach.  You see, I believe the "balanced" approach is one reason why we are in this mess.  If I live beyond my means, spending more money than I take in, I might suggest taking out a loan to pay for my rent.  I would tell my wife, "but honey, I know we need to make some adjustments to our spending, but we need a 'balanced' approach--one that involves loans."  While I may use the word balanced, I have not addressed the true problem.

The government takes in plenty of cash.  Don't be fooled.  It's not the amount of money coming in, it's the amount of money going out that is the problem.  Our entitlement programs have created a demand for government programs, and the government is more than happy to supply.  With other people's money, of course.

It's called redistribution of wealth.  Take from some, give to others.  Government doesn't create wealth, businesses (the people running the businesses) create wealth.  The goal of business is to make money, and that "making money" is what drives employment.  Employment comes from the expansion of business.  An expanding government is not creating more jobs, it's creating more cost.  That cost requires the government to take in more money, and that money comes from productivity.  If everyone had a government job, there would be no productivity to tax to generate revenue to pay the government employee.  Hence, everyone would have a job, but nothing to spend the money on.  And with no businesses making money, there would be no tax revenue coming in to the government coffers.  No money in the government coffers, no ability to pay government employees.  This is the fallacy of the people who believe more government jobs is good, and subsequently, more government spending is good.  That money that the government is spending is not their own.

The President gave a speech on Friday (it's hard to keep up with all his speeches), in which he said that rich people can give up more of their income because...well, they can.  While this is technically true, where is the fairness in this?  He advocated that it's "only fair" to ask for the rich to help even more, even though 50% of the country doesn't even pay taxes.  Our tax system is progressive, which means that not only do people who make more money pay more in taxes, they are actually taxed at a higher rate.  To say that people who are already progressively taxed should solve a problem created by the consumption (through social security, medicare, medicaid) of a majority of people who don't even pay taxes is ludicrous, not just unfair.

My MBA program began with an introductory course in economics.  It was a very good course, and I really enjoyed the book we used.  It was written by a professor at Harvard, who had served on President Bush's Council of Economic Advisers.

Anyway, I read a good article in the Wall Street Journal today from Professor Mankiw.  The title of the article is "I Can Afford Higher Taxes.  But They'll Make Me Work Less."  In describing how a higher tax rate for more income (progressive tax and marginal rate) actually "de-incentivizes" productivity, he says:

"Suppose that some editor offered me $1,000 to write an article.  If there were no taxes of any kind, this $1,000 of income would translate into $1,000 in extra saving.  If I invested it in the stock of a company that earned 8% a year on its capital, then 30 years from now, when I pass on, my children would inherit about $10,000.  That is simply the miracle of compounding."

"Now let's put taxes into the calculus.  First, assuming the Bush tax cuts expire, I would pay 39.6% in federal income taxes on that extra income (and a phaseout of deductions adds 1.2%)...I also pay Medicare tax...and I pay 5.3% in state income taxes.  Putting all those taxes together, that $1,000 of pretax income becomes only $523 of saving."

"And that saving no longer earns 8%.  First, the corporation in which I have invested pays a 35% corporate tax on its earnings.  So I get only 5.2% in dividends and capital gains.  Then, on that income, I pay taxes at the federal and state level.  As a result, I earn about 4% after taxes, and the $523 in saving grows to $1,700 after 30 years."

"Then when my children inherit the money, the estate tax will kick in.  The marginal estate tax is scheduled to go as high as 55% next year, but Congress may reduce it a bit.  Most likely, when the $1,700 enters my estate, my kids will get, at most, $1,000 of it."

"Here's the bottom line:  Without any taxes, accepting that editor's assignment would have yielded my children an extra $10,000.  With taxes, it yields only $1,000.  In effect, once the entire tax system is taken into account, my family's marginal tax rate is about 90%.  Is it any wonder that I turned down most of the money-making opportunities I'm offered?"

No, Professor, it doesn't.  When we punish success, that seems the logical conclusion.

Which society do you want to live in?  One that punishes those who supply the revenue to operate?  If you do that long enough, people leave or stop working.  As Congressman Boehner said today, "I've always believed, the bigger the government, the smaller the people.  And right now, we have a government so big and so expensive it's sapping the drive of our people and keeping our economy from running at full capacity...the solution to this crisis is not complicated: if you're spending more money than you're taking in, you need to spend less of it."

Sometimes the simple things are just too simple for Washington, I guess.

Economics From Mankiw

There has been a lot of discussion recently about a "balanced" approach to our debt problem.  You know, some cuts...but some tax increases, too.  I am not a follower of the "balanced" approach.  You see, I believe the "balanced" approach is one reason why we are in this mess.  If I live beyond my means, spending more money than I take in, I might suggest taking out a loan to pay for my rent.  I would tell my wife, "but honey, I know we need to make some adjustments to our spending, but we need a 'balanced' approach--one that involves loans."  While I may use the word balanced, I have not addressed the true problem.

The government takes in plenty of cash.  Don't be fooled.  It's not the amount of money coming in, it's the amount of money going out that is the problem.  Our entitlement programs have created a demand for government programs, and the government is more than happy to supply.  With other people's money, of course.

It's called redistribution of wealth.  Take from some, give to others.  Government doesn't create wealth, businesses (the people running the businesses) create wealth.  The goal of business is to make money, and that "making money" is what drives employment.  Employment comes from the expansion of business.  An expanding government is not creating more jobs, it's creating more cost.  That cost requires the government to take in more money, and that money comes from productivity.  If everyone had a government job, there would be no productivity to tax to generate revenue to pay the government employee.  Hence, everyone would have a job, but nothing to spend the money on.  And with no businesses making money, there would be no tax revenue coming in to the government coffers.  No money in the government coffers, no ability to pay government employees.  This is the fallacy of the people who believe more government jobs is good, and subsequently, more government spending is good.  That money that the government is spending is not their own.

The President gave a speech on Friday (it's hard to keep up with all his speeches), in which he said that rich people can give up more of their income because...well, they can.  While this is technically true, where is the fairness in this?  He advocated that it's "only fair" to ask for the rich to help even more, even though 50% of the country doesn't even pay taxes.  Our tax system is progressive, which means that not only do people who make more money pay more in taxes, they are actually taxed at a higher rate.  To say that people who are already progressively taxed should solve a problem created by the consumption (through social security, medicare, medicaid) of a majority of people who don't even pay taxes is ludicrous, not just unfair.

My MBA program began with an introductory course in economics.  It was a very good course, and I really enjoyed the book we used.  It was written by a professor at Harvard, who had served on President Bush's Council of Economic Advisers.

Anyway, I read a good article in the Wall Street Journal today from Professor Mankiw.  The title of the article is "I Can Afford Higher Taxes.  But They'll Make Me Work Less."  In describing how a higher tax rate for more income (progressive tax and marginal rate) actually "de-incentivizes" productivity, he says:

"Suppose that some editor offered me $1,000 to write an article.  If there were no taxes of any kind, this $1,000 of income would translate into $1,000 in extra saving.  If I invested it in the stock of a company that earned 8% a year on its capital, then 30 years from now, when I pass on, my children would inherit about $10,000.  That is simply the miracle of compounding."

"Now let's put taxes into the calculus.  First, assuming the Bush tax cuts expire, I would pay 39.6% in federal income taxes on that extra income (and a phaseout of deductions adds 1.2%)...I also pay Medicare tax...and I pay 5.3% in state income taxes.  Putting all those taxes together, that $1,000 of pretax income becomes only $523 of saving."

"And that saving no longer earns 8%.  First, the corporation in which I have invested pays a 35% corporate tax on its earnings.  So I get only 5.2% in dividends and capital gains.  Then, on that income, I pay taxes at the federal and state level.  As a result, I earn about 4% after taxes, and the $523 in saving grows to $1,700 after 30 years."

"Then when my children inherit the money, the estate tax will kick in.  The marginal estate tax is scheduled to go as high as 55% next year, but Congress may reduce it a bit.  Most likely, when the $1,700 enters my estate, my kids will get, at most, $1,000 of it."

"Here's the bottom line:  Without any taxes, accepting that editor's assignment would have yielded my children an extra $10,000.  With taxes, it yields only $1,000.  In effect, once the entire tax system is taken into account, my family's marginal tax rate is about 90%.  Is it any wonder that I turned down most of the money-making opportunities I'm offered?"

No, Professor, it doesn't.  When we punish success, that seems the logical conclusion.

Which society do you want to live in?  One that punishes those who supply the revenue to operate?  If you do that long enough, people leave or stop working.  As Congressman Boehner said today, "I've always believed, the bigger the government, the smaller the people.  And right now, we have a government so big and so expensive it's sapping the drive of our people and keeping our economy from running at full capacity...the solution to this crisis is not complicated: if you're spending more money than you're taking in, you need to spend less of it."

Sometimes the simple things are just too simple for Washington, I guess.

Not An Expenditure Problem?

There are still those who argue for a "balanced approach" to solving our national debt problem.  That, of course, is just code for raising taxes.

While I agree that simply doing the math equates to increasing revenue and decreasing expenditures, I also agree that there comes a time when a stand against wasteful spending must be made.  This is that time.  I also believe in compromise, but I believe in compromise that improves our future.  I don't believe in compromise that simply kicks the can down the road, increasing the size of the mess to be tackled at a later time.  At a certain point, the mess gets just too big, and very bad things happen.  Just ask the Greeks.

The cuts in expenditures need to come from the areas we spend the most money in AND the areas that are increasing as a percentage of GDP.  Those would be Medicare and Social Security.  Defense cuts have already begun and will continue.  It's time people felt less "entitled" to what government has led them to believe as "entitlements".

And why is it so hard to believe the politicians will do the right thing in this debate?  Well, in a time when people are losing jobs, facing shortfalls, and facing insecure futures, some politicians argue that money has to be spent on Poetry for Cowboys.  Yup.

Giddy-up little doggies, we are in the best of hands.

I'm Not Sold

Count me in the 20%, Mr. President.  Today the President said that the debt limit debate is purely ideological...there is nothing else concerned in the debate.  He said that the American people are "sold" on a tax increase.  Really?  I believe that government does not have a revenue problem...the government has an expenditure problem.  Why do I say this?  Behold:

I can't believe the leader of the free world would say that "the American people are sold...the problem is members of Congress are dug in ideologically..."

The President thinks that Congress is not reflecting the "will of the People".  Really?  

"55% Oppose Tax Hike In Debt Ceiling Deal"

"Poll: Americans Rule Out Paying More Taxes"

"Americans Aren't Ready To Pay More Taxes: More than 6 of 10 say they are unwilling to do so"

Do you feel you don't pay enough in taxes?  Sales tax, gas tax, utilities tax, payroll tax, state income tax, federal income tax...I could go on, but if you think you keep more than 50% of your income, you have a darn good tax accountant or are oblivious to tax reality.

We are in a very precarious situation...one that could have been avoided.  Both the Republicans and Democrats have spent too much of our nation's wealth.  But there is another side.  Americans have consumed too much of our wealth.  Our Constitution specifically gives the mandate for the federal government to protect us.  I get spending on national defense.  There are people who believe we spend too much on national defense.  To those I say, you need to walk the earth a bit more.  There are real dangers out there, and I've seen them.  Those people might also say that we continually spend more and more on national defense.  While that is technically accurate, it is also very misleading.  We continually spend more on everything.  Everything.  The economy grows, and so does our spending.  So, to solve this issue with pictures, here you go:

You see, while we've been spending more, we've been spending less as a percentage of what we spend on everything else.  Look at the red line...that's what we spend on defense as a percentage of GDP.  Does that look like a line that is causing our national debt crisis?

What do you see here?  Defense going down, social security going up, and Medicare going up through the roof.  And don't forget about the net interest from our debt.

Mr. President, it's not about the revenue.  It's about the expenditures.  Government is a growing beast that needs to be fed...and it keeps getting bigger.  It keeps getting bigger because people see the government as a solution to all their problems rather than relying on themselves.  We term safety nets of Social Security as "entitlements"...as if we are literally entitled to that money.  How perverse!!  We're slowly slipping into socialism...maybe something worse.  And Mr. President, the opposition you face is cold water being slapped in the face of this growing socialism, not something racial, as the "esteemed" Congresswoman from Texas might think.  

No, don't count me in the 80%, Sir.  Count me in the 20%.  I guess I'd rather face facts than reelection.

Just Cause

If you like the videos, then "keep the shiny side up" and see you on the road...I'll be the one riding with the huge smile.

If you don't like the video or don't understand:
(1) Visit your nearest Harley Davidson dealership immediately.
(2) Come ride with me.
(3) Live a little.

Ready to Roll Up His Sleeves

In response to this morning's job numbers, the President says he's ready to tackle the problem.

"Things can get better..."  Indeed.  He economic point man is saying that with an increase in taxes, the jobless rate can drop to 8.2%.  I'm not sure I follow his logic, but...ok.

The "hey, it's not that bad" responses that keep coming from the administration reminds me of something...



Update:

9.2%

That percentage is the big number of the day.

Unemployment has risen to 9.2 percent in June, and the number of jobs added for June was the lowest in nine months.

There has been much talk over the debt limit, and a compromise still seems far away (watched the Speaker a couple moments ago).  What I find interesting is both sides, in the public arena, seem to be focused on either increasing revenue (new or increased taxes) or reducing expenditures.

What is worse than the loss of 7.5 million jobs is an additional 3.5 million who have just stopped looking for work.  You see, if you stop looking for work, you stop being counted as unemployed.  According to Mortimer Zuckerman of US News, if you add in these folks, along with part-time workers who want to work full-time, then reality is 16% unemployment.  Ouch.

Yet I haven't heard anyone discuss increasing revenue through new taxpayers.  You see, if we increase the number of jobs, we inherently increase revenue through new taxable income AND we increase the productivity of the country.  Increasing jobs requires less regulation on businesses and more incentives to produce.  Those two facets are in short supply in today's political world.

Haven't heard anyone until now.  I wrote a couple days ago about Senator Marco Rubio from Florida.  His speech resonated with me.  Now, this.  Again I say, this guy "gets it".

Let’s stop talking about new taxes and start talking about new taxpayers, which means jobs. This debt is the No. 1 issue on everyone’s minds and rightfully so. It is a major issue, but everywhere else, in the real world, the No. 1 issue on people’s minds is jobs. And I tell you, every other problem facing America — a mortgage crisis, a home foreclosure crisis, this debt problem — all of these issues get easier to deal with if people are gainfully employed across America. And the impact that unemployment is having across this country is devastating. …

Our job here [in Congress] is to do everything we can to make it easier for them to find a job, not harder. And I think that’s what we have to do when it comes to ‘a balanced approach’ and when we talk about revenue. We don’t need new taxes, we need new taxpayers, people who are gainfully employed, making money, paying into the tax system and then we need a government that has the discipline to take that additional revenue and use it to pay down the debt and never grow it again. …

So you look at all these taxes that are being proposed and here’s what I say: I say we should analyze every single one of them through the lens of job creation, issue No. 1 in America. I want to know which one of these taxes they’re proposing will create jobs. I want to know how many jobs will be created by the planes tax. I want to know how many jobs will be created by the oil company tax that I’ve heard so much about. How many jobs are created by going after the millionaires and billionaires that the president talks about? I want to know! How many jobs do they create? …

I traveled the state of Florida for two years campaigning. I have never met a job creator who told me that they were waiting for the next tax increase before they started growing their business. I’ve never met a single job creator who has ever said to me I can’t wait ’til government raises taxes again so I can go out and create a job. I’m curious to know if they say that in New Hampshire because they don’t say that in Florida. So my view on all that is, I want to know how many of these tax increases the president proposes will create because if they’re not creating jobs and they’re not creating new taxpayers, they’re not solving the problem.

Atlanta is Burning

Fraud- a: "intentional perversion of truth in order to induce another to part with something of value..."

           b: "an act of deceiving or misrepresenting" - (Merriam Webster)

Georgia Statute 23-2-51 G, part c: "Misrepresentation of a material fact, made willfully to deceive or recklessly without knowledge and acted on by the opposite party...constitutes fraud.  Suppression of a material fact which a party is under an obligation to communicate constitutes fraud."

Georgia Criminal definition of Theft by deception-"The property of another is obtained through deceit." 

Well, that was an education in law, huh?  At least some educational benefit has come from 178 public teachers and administrators conspiring and executing fraud and theft.

Seems it's easier to go back and change the answers on your students' tests than to actually teach the students well to improve their grades.  You see, with higher scores comes higher No Child Left Behind funds. 

Oh, and seems like the administration covered up the evidence, too.  Quote: "Area superintendents silenced whistle-blowers and rewarded subordinates who met academic goals by any means possible.  Superintendent Beverly Hall and her top aides ignored, buried, destroyed or altered complaints about misconduct, claimed ignorance of wrongdoing and accused naysayers of failing to believe in poor children's ability to learn."

Named in the report (the governor's special investigation) are 178 teachers and principals.  80 have confessed.  44 of 56 schools examined show evidence of cheating.

Sad state of affairs, it is.  For the students, not the teachers.  If charged and convicted (which I hope happens), the teachers and administrators should serve time or community service.  Hopefully the teachers can teach their students what happens in the real world when you commit fraud and theft of public funds.

Instead of arming these students with the knowledge to climb out of poverty, the teachers have decided to engage in criminal behavior.  I wonder what lessons their students will take from this affair.

Especially if there are no consequences.

Fellow Citizens...

...may you enjoy this Fourth of July!  Happy Independence Day!

May you enjoy today with family and friends, knowing the sacrifices of those thousands who bore and are bearing the price of freedom.

Never forget that we are a special country.  None like it has ever existed before.

And it will only continue to be special, if we hold true to the Declaration and to the Constitution.  May we continue to be the shining city upon the hill.

Un-useful Idiot

As you prepare to celebrate the nation's independence, remind yourself that not all are created equal...

...in intellect.

The New York Times suggests that beef, pie, and potato salad are damaging to the environment, and we should give them up.  Brian Palmer of the New York Times suggests that potato salad is "always wasteful".  No, Brian, only your Op-Ed piece is wasteful.

For the good of the environment, maybe the NYT should stop being printed.  You know, because it's "always wasteful"...for the environment and the brain.

Sorry for the short post.  Off to the supermarket for beef, potatoes, and pie...the article made me hungry.