Coincidence

"When you see that trading is done, not by consent, but by compulsion - when you see that in order to produce, you need to obtain permission from men who produce nothing - when you see that money is flowing to those who deal, not in goods, but in favors - when you see that men get richer by graft and by pull than by work, and your laws don't protect you against them, but protect them against you - when you see corruption being rewarded and honesty becoming a self-sacrifice - you may know that your society is doomed." - Ayn Rand

Point 1:

Tax Tyranny

"The United States has the most progressive (i.e., unequal) tax system in the world. The bottom 50 percent of income earners, on average, receives more in tax benefits than they pay in taxes — while the highest earners pay a wildly disproportionate amount of their income in taxes — despite the myth that Warren Buffett has a lower tax rate than his secretary. A progressive income tax only meets the test of “consent of the governed” when a majority of each class of taxpayers consents to its tax rate. Otherwise, it is tax tyranny of a low-tax-rate majority against a vote-poor, high-tax-rate minority. The apologists for the progressive income tax claim it is only “fair,” ignoring the fact there is nothing at all “fair” about taxing at a higher tax rate those who work longer and harder and/or spend more time acquiring an education and work skills. It is destructive and tyrannical for a society to tax the most productive, innovative and job-creating people at a higher rate than others."

Point 2:

Forcing Trade

"The Obama administration is quietly diverting roughly $500 million to the IRS to help implement the president’s healthcare law.

The money is only part of the IRS’s total implementation spending, and it is being provided outside the normal appropriations process. The tax agency is responsible for several key provisions of the new law, including the unpopular individual mandate."

Point 3:

Control the Message

"Dept. of Labor Forcing Media To Use Government Computers"

"Unrest is simmering in some quarters of the Washington news universe regarding changes in the way the Department of Labor (DOL) manages its pre-release media “lockups” on sensitive data like weekly jobless benefits and unemployment...The system insures that major news organizations get the data as soon as possible and allows journalists covering the release get a jump on providing analyses and opinion about the data.

But Carl Fillichio, Labor Secretary Hilda Solis’ top communications advisor, circulated a memo earlier this week to interested media informing them that everybody is being required to re-submit their credentials requests.

Fillichio reminded participants that there are only 20-30 seats available for the lockups and that priority will be given by DOL in selecting participants to those that “are primarily journalistic enterprises.”

He also offered a one-sentence assurance that 'the department will not consider editorial or political viewpoints in making credentialing decisions.'

Whatever grumbling might be occasioned by being forced to go through the credentialing process again, the element of the Fillichio memo that has journalists worried is this paragraph:

'Second, as a measure toward enhancing security in its main lockup facility (the DOL news room), the department will supply and maintain standardized equipment with a standard configuration for all participants. This change means that privately owned computer and telephone equipment, including hardware, software, cabling, wiring and Internet and telephone lines will be replaced with equipment owned by the department.'

In other words, journalists will no longer be allowed to bring their laptops or other equipment to the lockups, they will have to use government-supplied equipment, described by Fillichio as including 'a virtualized desktop running a Windows operation system, a web browser, word-processing software, an Adobe Reader application and secure file transfer capability. Equipment provided will not have wireless networking capability. Provisions will be in place for news organizations to transmit their stories over the Internet.' "

Point 4:

The Bottomless Pocket

"The government spent at least $205,075 in 2010 to 'translocate' a single bush in San Francisco that stood in the path of a $1.045-billion highway-renovation project that was partially funded by the economic stimulus legislation President Barack Obama signed in 2009...the bush—a Franciscan manzanita—was a specimen of a commercially cultivated species of shrub that can be purchased from nurseries for as little as $15.98 per plant. The particular plant in question, however, was discovered in the midst of the City of San Francisco, in the median strip of a highway, and was deemed to be the last example of the species in the 'wild.' "


Ah, I'm sure I'm just using pieces of news stories to try and make some pithy argument.  Apparently, libertarians like myself are extreme (and would spit in the face of Dr. King, hate the people, hate the brown folk, the gays, the lesbians, the people with piercings and tattoos).  Extreme in the idea that each of us should enjoy the least possible restraints on our behavior and lives, only restraining ourselves when that behavior interferes with the freedom of others.  Government has a place...in enforcing personal property and law.  It should not be our big brother who we run to whenever there is a problem.

But, oh, I'm probably being extreme.  Yeah, that's probably accurate.  I mean, what's the point of looking at the big picture?  What has that ever solved?

Wee Willie Winky

Ok, so let's just get this out of the way before I go any further...

...all is well in the bedroom.  I have no problems being a man.  I am a great and powerful man.

Fine.  Ok then.

Anyway, a state senator from Ohio believes that government should regulate men's reproductive health, aka Viagra.  If it were up to Senator Nina Turner (hmm, would "Nina" be a woman's name?), men in Ohio who want Viagra would have to:

1. See a sex therapist.  (By the way, what a profession!  How would you like your first conversation of the day to begin with "How is your sex life?  Gettin' any lately?")

2.  Receive a cardiac stress test.  (So, even if you did die during sex, wouldn't that be the way to go anyway?)

3.  Receive a NOTORIZED AFFIDAVIT SIGNED BY A SEX PARTNER AFFIRMING IMPOTENCY.  (Oh my.)

Ohio Senate Bill 307 is not really a serious bill...of course, until it actually makes it through the state congress and is signed.  Then, of course, it's serious.

This bill is a counter-argument to regulating women's health.  I'll let the Senator speak for herself:

"Turner said if state policymakers want to legislate women’s health choices through measures such as House Bill 125, known as the 'Heartbeat bill,' they should also be able to legislate men’s reproductive health."

House Bill 125 attempts to limit abortion when a heartbeat is detected in an unborn child.  So, according to Senator Turner, regulating abortion is the same as regulating Viagra.

Hmm.

"A critic of efforts to restrict abortion and contraception for women, Turner says she is concerned about men’s reproductive health. Turner’s bill joins a trend of female lawmakers submitting bills regulating men’s health."

Tit for tat I guess. How very noble.

Breathtaking

Senator Sessions definitely hits the nail on the head with the description of "breathtaking".

Seven minute video worth watching...every minute.  But if you have a short patience, skip to 3:30.  The breathtaking part occurs from 3:30 to 4:15.

Both sides of the political aisle have played this game...that is, the Congress has not declared war since WWII.  Congress has "authorized" war, to include Vietnam, the first Gulf War, Operation ENDURING FREEDOM and Operation IRAQI FREEDOM.

Congress did not authorize the recent war in Libya.  Rather, it was "authorized" by UN Security Council.  Of note, the Korean War and Bosnia were also "authorized" by the UN.

I find this very troubling.  The authority for war rests with Congress, as clearly described in the Constitution.  If Congress finds it easier to "authorize" military action rather than call it "war", then I really don't have a problem with that.  In my opinion, it's a matter of semantics at that point.

But when Congress has no role, and we rely on the "authority" of a foreign body to authorize U.S. military action, well...

...it's breathtaking.

Walking Backwards

The President's recently submitted budget is slated to kill the D.C. school voucher program called the Opportunity Scholarship Program.

School vouchers have proved a huge success, giving parents choice in how their tax dollars go to providing an education to their children.  Opponents of the voucher program attempt to find every possible failure of individual students, and use those failures to draw a bleak picture of the program.

Yet the overall facts don't support detractor's theories.

But, when you support increased government control over people's lives (as the administration does...and it's not just Democrats, you know) and when you must appease a union powerhouse (aka the teacher's unions)...

...you kill individual choice.

"The D.C. OSP (Opportunity Scholarship Program--aka, School Voucher program) has been highly successful. According to federally-mandated evaluations of the program, student achievement has increased, and graduation rates of voucher students have increased significantly. While graduation rates in D.C. Public Schools hover around 55 percent, students who used a voucher to attend private school had a 91 percent graduation rate.

And at $8,000, the vouchers are a bargain compared to the estimated $18,000 spent per child by D.C. Public Schools.

The Department of Education’s budget will increase 3.5 percent if the proposal is enacted, continuing a failed trend of spending more taxpayer dollars through Washington on a myriad of programs with a poor track record.

By contrast, the D.C. OSP has a stellar track record of increasing academic success, student safety, and parental satisfaction. And because of the nature of the District of Columbia (education in D.C. is under the jurisdiction of Congress), it is entirely appropriate for the federal government to fund the D.C. OSP."

Less money for people to make the best choices for themselves and more money for central planners.

Yup, walking backwards on the road to recovery and moving forward on the Road to Serfdom.

Fun With Headlines

Headline 1:

"Chevy Volt Battery Fires Threaten All Electric Vehicle Makers, Not Just GM"

Headline 2:

"California Regulators Pass Emission Standards That Will Require One in Seven New Cars To Be Sold in 2025 To Be Electric or Zero-Emission"

So much for the free market and safety!  Even with huge cash incentives, people just are not ready for the switch...nor do they think its safe or makes economic sense.  Instead of letting the free market decide winners and losers, a "regulatory" board decides for us.  You see, central planners always have a better idea of what's good for the consumers and for the environment.

Until they don't.

"Solyndra Bankrupt: Department of Energy rushed federally backed loans to company--taxpayers lose $528 million"

Don't forget, if you think the government is all powerful and knows what's best for the environment, just remember who routinely exploded atomic weapons on our own soil.

"Wow, just got windy out here Bob!"

The Fourth, Fifth, and Sixth Amendment...

...of the U.S. Constitution.

"The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the pace to be searched, and the persons or things to be seized."

"No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation."

"In all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial, by an impartial jury of the State and district wherein the crime shall have been committed, which district shall have been previously ascertained by law, and to be informed of the nature an cause of the accusation; to be confronted with the witnesses against him; to have compulsory process for obtaining witnesses in his favor, and to have the Assistance of Counsel for his defense."

In the Senate's National Defense Authorization Act (voted approved on Tuesday) , a provision allowed the military to detain terrorism suspects on U.S. soil and hold them indefinitely without trial.

It applies to citizens and non-citizens.

In other words, a terrorism suspect would get just one hearing where the military could assert that the person is a suspected terrorist.  That "suspect" could then be locked up for life, without ever formally being charged.  It allows the military to hold suspected terrorists indefinitely without a trial or due process.  These "terrorists" (I use quotations because, really, who actually defines what a terrorist is?  Is it Al Qaida?  Is it someone attempting to blow up a building?  Is is someone protesting a bank?  How about someone who argues against a public figure? Who makes this call?  And what political party are they affiliated with?) The only waiver is from the Secretary of Defense.


Oh, good.  I thought the Bill of Rights were endowed unto us by our Creator.  I guess the Secretary of Defense has a direct line to the Almighty.


This bill passed the U.S. Senate by a vote of 93 to 7.  Yup, just 7 Senators objected to a direct violation to the U.S. Constitution.

Does the Senate actually read the Constitution?  Or do they just pass laws to get reelected, knowing that the Supreme Court will correct their stupidity mistake?

But what if the Supreme Court doesn't correct such an affront to our basic Constitutional rights?

Oh, I know.

Paradox

Just a short message from Ben Stein worth contemplating...shortly followed by a face palm.

"Fathom the hypocrisy of a government that requires every citizen to prove they are insured...but not everyone must prove they are a citizen."

Happy Birthday!

Congratulations, Department of Energy!  You turned 34 this year!

Thirty-four years after its creation, the DOE employees 16,000 federal workers and 100,000 contract employees...with a $26 Billion budget.

Its charter?

In 1977, the Department of Energy was created to "lessen our dependence on foreign oil".

Now that's progress!

Happy Birthday, big government bureaucracy!

Double Down

To "Double Down" in Blackjack: The player is allowed to increase the initial bet by up to 100% in exchange for committing to stand after receiving exactly one more card.

To "Double Down" in politics:

First Card:


The Double Down:



"Families like yours, young people like the ones here today--including the ones who were just chanting at me--you're the reason that I ran for office in the first place."

Even though the President is extremely smart, especially in politics, I don't think he'd do well at Blackjack.

You don't Double Down when you are given a very, very bad card.  Note to whoever is advising the President to embrace the OWS crowd.

Stop.

In my humble opinion (of course), the OWS crowd is destructive, not creative.  It's socialist, not capitalist.  It's negative, not positive.  It's backward thinking, not forward thinking.  It's a proven failed philosophy, not a correction to a masterpiece.  It's exactly what we don't need.  To think otherwise is to embrace insanity.  Really, I'm not kidding.  Let me put it this way...would you let anyone at the OWS rally look after your child while you're away?  No?  Then why are you taking their view on the economy...something that will shape your child's future?

This country has done magnificent things, and this economy has driven prosperity to all time highs.  Prosperity is relative, of course, but so is the definition of poverty.  The lack of a job is not the issue.  The real issue is the lack of incentives for businesses to create those jobs.

If government figured out that instead of "telling" business what to do, they "incentivized" business, the economy would flourish.

At the beginning of economist F.A. Hayek's "The Road to Serfdom", Hayek stated that when government controls the economy, what's more at stake is not our wealth...but our "alteration in the character of the people."  If the President believes that government should control all the "faults" of the economy, then we will fundamentally change as a people.

According to the Tax Foundation, 60% of the population now gets more in government benefits than it pays in taxes.  Over half of our population lives at the expense of the rest.

Is this truly what we want in our country?  60 will become 70%....and 70 becoming 80%.  Unless we change, this is not conjecture, it is fact.  Do we want a culture of takers or makers?  Do we want freedom and self-responsibility or do we want the tyranny of the Nanny State?

This is the true discussion.  All else is smoke and mirrors.

What's Good for the Gander...

...is apparently not good for the goose.

A press conference was held today by self-ascribed millionaires.  They were demanding Congress tax them more...since, of course, they are not taxed enough.

Yes, these folks are not happy that they already give up a third of their income.  They want Congress to take more.

Well, so be it.  How about giving it now?  We'll help...here's a checkbook.

Oh wait...did they say voluntarily give more taxes?  Nope.  They want Congress to involuntarily take more taxes (not that taxes are voluntary to begin with).  But not starting with them.

After watching this video, I'm not too sure these guys are millionaires.  If they are, then I see something even darker.  Not only are these guys richer than you (and are probably pretty darn happy about it), but they also want something else they are not saying.

Power through tyranny.

I know it doesn't make sense initially, but think about it a while and then ponder, "Why won't these guys give up their own money voluntarily?  Why do they need Congress to force it upon others?"

Because these guys are in the minority.  The rest of the millionaires out there think these guys are lunatics.  And they are.

But there's only one way lunatics can get insane things done.

Through Congress.

Is It Any Wonder?

Up-front disclaimer:  I like Herman Cain as a potential candidate for the Republican ticket.  I like the idea of a free-market, business type of guy running the country.  Someone who has been in the private sector longer than has been in the public sector.

Yet, I don't think he's the Republican's best ticket against President Obama.  I just don't think he could win.

All that aside, the attacks against Cain have been relentless the past week.  At first, I saw the "chink in the armor".  I figured it was adios, amigo.  Who's up to bat next?

But here's what's bothering me.  I don't usually listen too much to Ann Coulter.  She's pretty far to the extreme right for me...but...for argument's sake, let's just assume the following is "true" and then discuss:

"So it's curious that all the sexual harassment allegations against Cain emanate from Chicago: home of the Daley machine and Obama consigliere David Axelrod.

The Daley-controlled Illinois Restaurant Association works hand-in-glove with the National Restaurant Association.  And strangely enough, Cain's short, three-year tenure at the NRA is evidently the only period in his decades-long career during which he's alleged to have been a sexual predator.


And now, after a week of conservative eye-rolling over unspecified, anonymous accusations against Cain, we've suddenly got very specific sexual assault allegations from an all-new accuser out of...Chicago.


Herman Cain has never lived in Chicago.  But you know who has?  David Axelrod!  And guess who lived in Axelrod's very building?  Right again:  Cain's latest accuser, Sharon Bialek.


The reason all this is relevant is that both Axelrod and Daley have a history of smearing opponents by digging up claims of sexual misconduct against them.  John Brooks, Chicago's former fire commissioner, filed a lawsuit against Daley six months ago claiming Daley threatened to smear him with sexual harassment accusations if Brooks didn't resign.  He resigned--and the sexual harassment allegations were later found to be completely false...


...one month before the 2004 Democratic primary for the US Senate, Obama was way down in the polls, about to lose to Blair Hull, a multimillionaire securities trader.  But then the Chicago Tribune--where Axelrod used to work--began publishing claims that Hull's second ex-wife, Brenda Saxton, had sought an order of protection against him during their 1998 divorce proceedings...Hull's substantial lead just a month before the primary collapsed with the nonstop media attention to his divorce records.  Obama...won the primary."

Ok, now that that's out of the way, let's ponder for a moment.  Is it a stretch of the imagination that dirty politics are played on the national stage?  Is is a wonder that "anything goes" when one is fighting for the top jobs of US government power?

If the answer is "yes, I assume anything goes", then is it a wonder why good people don't run for office?  Have you ever wondered why better choices are not given in an election?  Have you ever wondered, "gee, not much of a choice here...guess it's the better of two evils"?

There are better people out there.  There are exceptionally qualified people who should run.  There are better choices.

But, like any good parent and spouse, they choose their family over politics.  They know that fairness is NOT a part of our political "game", and that their loved ones could be the true victim in the road to the White House.  I don't know the truth of what happened with Herman Cain and the women that are, 15 years later, coming out saying, "oh, he's a bad guy."  What I do know is, if a true crime occurred, the evidence to exonerate Cain is long past...and the political operatives know it...and love the fact he can't possibly defend himself.  Guilty until proven...well, there is no fair process in the court of public opinion.

How very sad.  How very sad for his family.  How very sad for our country.

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.