Absurdity

So, a CAT 2 is rolling through the east coast.  All storms are potentially dangerous, but...really?

Millions have been evacuated, and the storm hit with 85mph winds. Politicians are so worried about becoming the next "Katrina" mayor, they're forecasting the apocalypse if people don't drive to Kansas and dig a hole to live in.

"What absurdity?" you may ask.  Behold:

The President has manned the "hurricane command center", as if any decision he makes there will have any outcome on what the hurricane does.  Mother nature, Sir, is not beholden to the Executive Branch.  Who is able to make the best decisions?  Local officials there on the ground, or the President who is staring at a nice LCD monitor getting the info...from the officials on the ground?  To me, this is another perfect example of the trend of running to the federal government for all of our problems.  Hurricane coming?  Leave.  Board up your windows.  Mayors, call out the emergency personnel.  Why do we need the President manning a command center like this was the opening wave of WWIII?

Part of me wants to blame the media.  The media started this circus by describing this as the storm of the century.  Mayhem.  Apocalypse.  And no matter what happens, whether the facts prove them wrong about the intensity of this hurricane, there's a story to be told.  And the story is what sells.  So, sell, baby, sell!

Oh, the winds are only at 85 mph?  Hmm...oh wait!  A guy got killed by a falling branch!  See, we told you it was the worst thing in the world!!!  Are you still a little skeptical of the Skippy cynicism?  Behold:

Reporter Gives Update Covered In Sea Foam: MyFoxNY.com

Look, I really hope I'm wrong.  I hope our elected officials are right, and are making calls on what they truly believe are the rights things to do.  But something tells me it's not.  Something tells me this is grandstanding mixed with a lot of CYA.  Call me a cynic.  

When the mayor of New York and the governor of New Jersey say that staying behind is "against the law" and "are putting emergency personnel at risk", I get a little cynical.  Where is that law written?  There's no law against stupidity, if in fact these people are acting stupidly.  This, from a mayor who wanted to ban salt from restaurants.  No kidding.  And putting emergency personnel at risk?  Driving a car, swimming in the ocean, lighting candles in your living room, camping in the forest, hiking up mountains, flying, scuba diving, hand gliding...well, you get my point.  These are all risky actions, and they all have the potential to put emergency personnel at risk.  But they're not against the law.  

And that's why I'm cynical.  When things aren't logical, you should find the true answer in politics or money.

I think I found one, at least.

"Wal Mart, Home Depot, grocers get big boost from Irene."

Update:

Like I said, follow the money trail.  "New Jersey governor Christie expects storm damage in billions."  Hmm.  Wonder where the money is going to come from.  I wonder.

Garbage In, Garbage Out

Seems the representatives of the people are not educated in the ways of supply and demand or debits and credits.

According to a report from the Employment Policies Institute, only 1 in 5 members of Congress has a formal education in business or economics.  Broken down, only 8 percent majored in economics while 14 percent majored in business or accounting.

Of course, you don't necessarily need a formal education to make good policy.  But if you lack the formal education, maybe you should spend more time listening than talking.  Maybe your statements would not make you sound, so...what's the technical term?  Ah, yes.  Boneheaded.



Well, based on that logic, let's give everyone food stamps!  Put everyone on food stamps and we'll really stimulate the economy.  We'll borrow the money (from China, probably) and turn every one of those dollars from China into $1.84.  We'll have a robust economy!  And we'll have more money so we can pay them back!  Heck, if we gave everyone food stamps, we could stimulate the economy and balance the federal budget and eliminate the national debt!  And if a dollar turns into a $1.84, why stop at food stamps?  Let's give everyone a huge paycheck each month, and then they can go out and buy all kinds of stuff!!!  Of course, we'll need to take everyone's income and production so we can fund it.  Hmm, that sounds like another economic theory, but I just can't put my finger on it.  An economic free lunch!  Of course, the above video was only the Secretary of the Agriculture.  I'm sure no one in Congress would say such a thing.



The report says of our politicians, "This research suggests that our elected representatives may want to dust off their Econ 101 textbook (if they have one) before trying to tackle the weighty questions about the impact of taxes, spending, and debt on our economy and the labor market."

Gee, how novel of an idea.

It's Been A Long Week

It continues to be a busy couple of weeks for me, so until things mellow out, here's something to pacify your Skippy-necessity.

Allow the Judges To Retort

The following is an update to my previous post, but it is so good, it deserves it's own section of the blogosphere.

As you may know, especially after my last post, I do not agree with the Affordable Care Act (aka, Obama Care or Socialism In A Can).  I've attempted to relay that sentiment at times, but sometimes other people say it better.

In this case, the judges from the 11th Circuit Court have said it magnificently.  Why reinvent the wheel?  Especially if you have other things to do.

The Court wrote, "The government's position amounts to an argument that the mere fact of an individual's existence substantially affects interstate commerce, and therefore Congress may regulate them at every point of their life.  This theory affords no limiting principles in which to confine Congress's enumerated power."

In other words, if the White House's and Congress's view on this hold, it can force individuals to enter contracts with private companies from birth to death.  In other words, there are no longer any limits on what Congress can do.

The Court continues, "Every day, Americans decide what products to buy, where to invest or save, and how to pay for future contingencies such as their retirement, their children's education, and their health care.  The government contends that embedded in the Commerce Clause is the power to override these ordinary decisions and redirect those funds to other purposes."

The government has never claimed a power like this in the form of an individual mandate.  The Obama administration claims that health care is somehow inherently different from other economic decisions.  The 11th Circuit retorts that these claims are "ad hoc, devoid of constitutional substance, incapable of judicial administration--and consequently, illusory....they are not limiting principles, but limiting circumstances...(that) imperil our federalist structure."

I'm not quite sure what that means, but I think they are saying the former law professor who is now the President should just teach law, not practice it.

Allow Me To Retort

Today, the 11th Circuit Court of Appeals ruled "Obamacare" (Affordable Care Act) unconstitutional.

Of course, the White House was not pleased with the decision and issued a statement on the White House blog. I'll save you some time and provide the most qualifying comments...with Skippy "addendum's", of course.

“There has been no shortage of court cases regarding the constitutionality of the Affordable Care Act. Before today, four courts, including the Sixth Circuit Court of Appeals, examined the health reform law and found it constitutional.  Today, a different court ruled against the Affordable Care Act’s individual responsibility provision. We strongly disagree with this decision and we are confident it will not stand.”

Skippy summation: "We would like to pick and choose which law is good and which law is bad. You see, these judges over here are making the right decisions...those over there are not. Since these judges over here agree with us, then they are right. Since those judges over there do not agree with us, they are wrong. Questions?"

“The individual responsibility provision – the main part of the law at issue in these cases – is constitutional. Those who claim this provision exceeds Congress’ power to regulate interstate commerce are incorrect.”

Skippy summation: "It's constitutional because we say it's constitutional...capiche? Those who claim this provision exceeds Congress' power to regulate are either Tea Party terrorists, or people who think that government should not be able to tell its people what they should buy and how much they should pay for it, essentially destroying any free market solution. The former probably believe that government should allow the free market to decide the price of goods and services. Those same people probably assume that pharmaceutical companies who make profits from people being sick is a good thing, in that the desire to make profits cure disease and increase the medical welfare of the people, as shown over the last 100 years. Those same people probably wish that government would help increase the supply of doctors vice incentivizing the increase of supply of free riders who increase the demand of medical services (increase in demand with decrease in supply...aka, what economists call a shortage...we've seen that in Canada and the U.K., but we're confident it just can't happen here...we're awesome!). We completely disagree with those people. They are idiots."

“Individuals who choose to go without health insurance are making an economic decision that affects all of us – when people without insurance obtain health care they cannot pay for, those with insurance and taxpayer are often left to pick up the tab.”

Skippy's summation: "Not one single person in this country goes without health care. There are, of course, people who go without health insurance. We'd like to conflate those two so that you find it harder to understand. You see, while we don't have a problem with illegal immigrants who use health care and make the rest of us pay for it, those Americans who do the same are bad, very bad people. Also, we don't like that people can make economic decisions that affect other people. For example, if you have an iPad and I don't, you've created a inequality that just can not stand in this America, comrade. If you have great insurance, and this guy over here does not have great insurance, well, that just will not stand. We must make everyone equal. To each according to his ability, to each according to his need. (P.S.--the "pick up the tab" thing was probably a bad choice of words after Congress increased the debt limit this past week, ensuring our children's children's children will be picking up the tab of our current spending)."

“That’s why the Affordable Care Act requires everyone who can afford it to take responsibility for their own health care and carry some form of health insurance.”

Skippy's summation: "We'd like you to take personal responsibility for your own health care, but we need you to choose this plan for this price...we don't care if you don't like it and could do better. Or for that matter, we don't care if the country can't actually pay for this system. We're talking about your personal responsibility, not the government's responsibility, ok? You see, health care is a right. If we call it a right, the government must pay for it. You question this? Capitalist Pig! Now that we think about it, isn't food a right? Well, we'll be implementing the Affordable Safeway and Kroger Act soon which will ensure everyone eats well and doesn't have to pay for it. Also, we plan on enacting the Affordable House Act, which will ensure everyone has a free house to live in. I mean, if health care is a right, then surely food and and a place to live are also. And for that matter, we'd like to see the Affordable Water, Sewage, and Electricity Act, because people have rights to those also. How could you live without water, sewage or electricity? Those are rights too. And since everyone needs to be able to transport themselves to their jobs, we'll be recommending the Affordable Car Act, followed shortly by the Affordable Gas Act. I mean, a car without gas does no good, right? We plan on funding these too, via the federal government...we'll just need to continue to increase your taxes. What, you have a problem with increasing your taxes? What are you, a terrorist?"

Well, in all seriousness, I don't blame the White House for responding. It was a great piece to read (and I know the brother of the author...Guano, you owe me money). It just still amazes me that so many people still believe in the fallacy of a socialist world. It doesn't work. I wish I could say something to these people who believe in socialism that would change their mind. But there's really nothing I can say. Like telling my daughter, over and over, not to touch the hot stove, sometimes...well, she just has to touch the stove to see that it really will burn.

I just wish we all didn't have to feel the pain along with them.

Your Yearly Hearing Test

Listen closely.  Replay if necessary, but turn your volume up.  If you catch it, congrats, you pass...er, bad choice of words.



I'm sure it was just the chair.  But wouldn't it be great if it wasn't?  Disclaimer:  I'm no fan of Congressman Barney Frank.  Especially since he thinks that the first place to gut funding is the Department of Defense, and that "no good purpose" has come from operations in Iraq and Afghanistan.

Yes, we're spending $140 Billion a year on these operations....but, currently, the debt is increasing by $3.8 Billion per day.  In July of 2009, we paid $19 billion just in interest on our debt.

By my math (using old 2009 numbers), that's approximately $230 Billion a year just in interest.  Almost double what we paid in military operations.  While he may think we're not getting much out of these operations, I think he would privately admit it's a lot more than we're getting by paying interest.

Or not.  He is a politician.  But back to my original point, I do feel sorry for that chair.

Update:

And one more thing for the Honorable Congressman from Massachusetts (that's a hard state to spell...and I'm from Mississippi!).

Since 1967, our spending on the DoD has fallen from 45% of the budget to 20%.  Social Security has risen from 14% to 21%.  The payment on the interest (to our debt) has risen from 7% to 9%.Medicare and Medicaid has risen from 2% to 21% of the federal budget.

You tell me...which is the growing beast?  Defense or entitlements?  Which is the growing problem, defense or entitlements?  Which, if left unchanged, will consume the federal budget...that which is shrinking or that which is growing?

It's a pretty simple answer, but a very complex solution.  

The Search For Answers Excuses

Think I'll Call In Sick

Ah, I feel a 3-4 day flu coming on.  Cough, cough.  Yeah, I may not make it into work this week.

Maybe one day I'll make the voyage.  Until then, keep the shiny side up...have fun!

The Art of Compromise

Ah, yes, compromise.  Like I said before, compromise for the sake of compromise is worthless.  Unless something good comes from it, compromise is...compromising.

Good thing we "hurried" to get the compromise debt deal through...you know, before our credit was downgraded.

Behold!  The art of compromise!

Ever been to a art studio?  Sometimes, the art just sucks.

Admitting You Have a Problem

Well, the first step to dealing with a problem is accepting you have one.

White House Press Secretary: "The White House doesn't create jobs."

Bravo.  I'm actually surprised they understand this, with their massive Keynesian gavel they've been slamming on our heads lately.

Next step, though, is actually putting your actions behind your words.  You see, if you admit that the White House (executive branch of government) doesn't create jobs, then who does?

Business creates jobs.  Business, with the goal of making profit, producing goods that people want to consume, hire labor to produce those goods.  Those goods meet a demand (hmm...supply to the demand...think I read that somewhere before).  Those laborers then can purchase other goods with their salary and contribute to funding the government with taxes.

The White House spokesman (Jay Carney), went on to say that "legislative priorities the President believes will create jobs" will help the economy.  Doh!

Well, I guess he needs to go back to step 1.  The legislature doesn't "create" jobs.  Business does.  Government jobs (all jobs, really) are a cost, not a benefit.  Government should only provide services which the benefits outweigh the costs...or those that can only be realized at an organized federal level (e.g., the military).  Economically, you should only invest in that which the benefit outweighs the cost.  Businesses, as a logical being, incur costs only when the benefit is greater, and part of those costs are jobs.  Those jobs are the costs which are incurred by attaining the benefit.

Where does tax revenue come from?  Ah yes, the laborers from the businesses (who are actually the creator of jobs). You see, there would be no government jobs if there was no revenue coming into the government to hire those government workers.  Government doesn't create wealth, it redistributes it.

Well, I guess the simple fact of saying "the White House doesn't create jobs" is pretty good for this administration.  You know what, who am I to lecture on economics?  Listen to an expert.  I wish I could have spent an hour with the Professor.

The Dereliction of Logic

Logic: "A particular mode of reasoning viewed as valid or faulty."

Overkill: "To obliterate with more force than required."

Unjust: "something characterized by injustice"

Why the drive down Webster's lane?  Oh, I don't know.  A little linguistic foreplay before the "you gotta be kidding me" moments you are about to enjoy.

- 11yr old girl saves woodpecker from family cat.  Keeps bird in cage until well enough to fly away on its own.  US Fish and Wildlife officer finds out and shows up with a State Trooper at their front door with a citation and summons.  Feds fine the family $535 and a possible 1 year imprisonment for the girl's mother.  Story here.  Update: US Fish and Wildlife commission: "Oops.  Sorry about that...it was a 'clerical error'."

- Police in Coralville, Iowa, shut down a business they say was breaking the law.  The proprietor of the business was given a cease and desist.  The proprietor was 4 years old and the business was a lemonade stand.  Story here.

- Police chief in Midway, Georgia told a couple girls (saving up for a water park visit) to stop selling lemonade at their stand.  Police chief said that "the law is the law".  The law requires the little girls to buy a business license and food permit which costs $50 per day and a $180 per year.  They're going to have to sell a LOT of lemonade to make that profit margin work.  Story here.

You know, if the government is having trouble making budgeting cuts, I can recommend 3 "officer of the peace" positions that should be eliminated.  They seem to have too much time on their hands and a lack of perspective.

Rant complete.

  

Some Humor to Lighten the Day

Disclaimer: This humor is offensive.

In other words, it's pretty funny.

Fun With Numbers 2

With "million", "billion", and "trillion" being thrown around in the news constantly, I thought it would be important to add a little perspective.

What is a million?  What is a billion...and a trillion?

Let's use age as a perspective.  When a baby is born, how long does it take for that baby to live a million seconds?

The baby would be approximately 11 days old.

How long does it take for that baby to live a billion seconds?

The baby would be 31.7 years old when it has lived for a billion seconds.

What about a trillion seconds?  How old would that baby be alive if it lived for a trillion seconds?

The baby would be 31,709 years old.  That's an old baby.

Interesting stuff to keep in mind when thinking about our $14 trillion debt...and increasing by $3.81 billion per day.

One more thing--if every man, woman, and child had to pay down our debt, how many dollars per person would that be?  $46,149.96 (that's using an estimated population of 311,043,303).

My daughter better start charging more at her lemonade stand.

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.