Week in Review
The supercommittee failed. Deadlocked over higher taxes. What a surprise. And by surprise I mean it’s what everyone expected. Because it never had anything to do with deficit reduction. It was just yet another opportunity for Democrats to raise taxes. And when they failed it was yet another opportunity to blame Republican intransigence. While all the time refusing to budge from their demand for new taxes (see Supercommittee Failed, and Spending Is Still the Problem by Curtis Dubay posted 11/25/2011 on The Foundry).
Overspending, especially on entitlements such as Social Security, Medicare and Medicaid, is the cause of our debt problem.
Higher taxes are unnecessary because there is enough revenue flowing into Washington as long as Congress holds spending to historical levels. According to the Congressional Budget Office (CBO), with all current tax policies, including the Bush tax cuts, tax revenue will surpass its historical average as a share of the economy in a decade. And should the economy break the shackles of growth-impeding Obama policies faster than CBO anticipates, tax revenues will exceed that mark much sooner.
On the other hand, in 2021 the federal government will spend 26 percent of the economy, well in excess of its historical average of 20 percent. And it will keep growing on this trajectory, primarily because of the growth in entitlements. The data is clear. We have a spending problem – not a taxing problem.
They’re forecasting tax revenue at record amounts. Yet it’s not enough. It’s never enough. Why? Because the government spends it faster than they can collect it. And that’s the problem.
Advocates of raising taxes often resort to the argument that debt reduction requires spending cuts and tax increases. But they’re merely revealing their preference for bigger government. Higher taxes lead to bigger government because Congress always spends the extra revenue it raises. The new taxes never go to deficit reduction. That’s why any deal that offers spending cuts in exchange for tax hikes is fundamentally unbalanced – despite the president’s claims.
Higher taxes would go to pay for the spending increases that President Obama and his allies foisted upon the country – including stimulus spending, Obamacare, and a host of other big government programs. Unless they’re reformed, entitlement programs would also devour new tax revenue as more baby boomers retire.
Presidents Reagan and George H.W. Bush learned the tax-and-spend lesson the hard way. They agreed to deals that were supposed to cut spending and raise taxes. While the tax hikes became permanent law, succeeding Congresses were under no obligation to abide by the agreed-upon spending levels and quickly undid them. The same would be true today if Congress strikes a similar deal.
How to you get a deficit? By spending more than you collect in taxes. Note the word ‘spending’. That’s key. Because if you don’t spend more than you collect in taxes you don’t have deficits. Record lows in tax revenue didn’t cause Barack Obama’s record deficits. Record government spending caused those record deficits. Again, spending is key. Because you have to overspend to get a deficit.
This isn’t chicken and egg stuff. Spending clearly came first. Then deficits. So the logical and rational way to deficit reduction is to cut spending. Not to raise taxes. Because raising taxes just supports further overspending. And you know they will. Because they always do. Because you don’t buy votes with deficit reduction. You buy votes with spending.
Which is why the supercommittee failed. Because it was supposed to fail. If the full House couldn’t agree to spending cuts neither could a supercommittee. Because they all report to the same leadership. This was just theater to raise the debt ceiling. And a delaying tactic by the Democrats who hoped they could turn public opinion into favoring tax hikes.
So now what? I’m guessing more lies. And more theater. At least until 2012. When the curtain finally falls on this tragic comedy.
Tags: cut spending, deficit, deficit reduction, Democrats, government spending, higher taxes, overspending, raise taxes, raising taxes, record deficits, spending, spending problem, supercommittee, tax revenue, taxes
Week in Review
I guess George, John, Paul and Ringo were wrong. Love isn’t all you need. You also need conflict resolution services (see Women Bring Peace to Zuccotti Park by Victoria Pynchon posted 11/26/2011 on Forbes).
Peter, Paul and Mary memorably sang “whenever two or more of you are gathered in His name, there is love.” But whenever two or more of us are gathered to build a bridge, stage a protest, or run a business, there is conflict.
Fortunately for Occupy Wall Street in Zuccotti Park, mediators and other peace workers have been providing conflict resolution services to protestors, including daily nonviolent communication training and mediation for conflicts among the occupiers.
Guess that’s what happens when you use your fellow protestors’ part of the commons as your personal toilet.
One thing for sure is that you never heard stuff like this about the Tea Party. The Tea Party generally cleaned up after themselves. Didn’t urinate or defecate anywhere but in a proper toilet facility. And they didn’t want to beat the crap out of their fellow protesters. Because they all got along. And they got along with the community they were in. For there was, dare I say it? Love.
Everybody now…love, love, love…. All you need is…love, love, love…
Like in the Tea Party. But apparently not in the Occupy Wall Street movement in Zuccotti Park.
Tags: conflict, conflict resolution services, love, Occupy Wall Street, protestors, Tea Party, Zuccotti Park
Week in Review
Once again someone is advising the Republican Party how to pick their candidate. And apparently the ideal Republican candidate would be a Democrat (see Jon Huntsman’s Vision for the US Military by E.D. Kain posted 11/24/2011 on Forbes).
It’s become increasingly clear to me what a shame it is that the Republican Party is so in thrall to its far-right fringe. If they weren’t, former Utah governor Jon Huntsman might stand a chance at the GOP nomination. That would be a good thing for the Republican Party and for the United States.
It would be good for the Republican Party because Huntsman has broad appeal outside of the conservative base. He also has presidential good looks, has command of the issues, and manages to be at once reasonable and articulate in a debate that has teetered too often between the ludicrous and the absurd.
So, the Republican Party, the party of conservatism, would be best served by nominating a candidate that isn’t a conservative? Didn’t we try this already? Didn’t we nominate John McCain because he was everything this guy says Huntsman is? Well, everything perhaps except being handsome. And how did that work for us? Not good. Because the moderate voters chose the other moderate in the general election. Barack Obama. And he was only lying about being a moderate to boot.
The last great Republican president was Ronald Reagan. And why did we elect him with such overwhelming majorities? Could it be because he ran as an unabashed conservative? You bet. Because the voters in a center-right nation didn’t want someone who could reach across the aisle and cave on issues conservatives hold dear. Like John McCain campaigned that he was only more than willing to do.
When they compare Barack Obama to Ronald Reagan during election times you know running as a conservative wins elections. Republicans should try that. Running conservative candidates. And forget about reaching across the aisle. For the Democrats don’t. The only time they feign interest in bipartisan cooperation is when they’ve lost Congressional majorities. And can’t dictate policy anymore to the minority party.
Tags: Barack Obama, conservatism, conservative, Democrat, elections, John McCain, Jon Huntsman, moderate, Reagan, Republican candidate, Republican Party, Republicans, Ronald Reagan
Week in Review
Another free trade agreement for America. And more young voters angry about income inequality and youth unemployment this free trade treaty will create (see Don’t shed a tear posted 11/23/2011 on The Economist).
They could have pushed Korus through several weeks ago, but continuing concerns among voters over income inequality and youth unemployment have seen the political pendulum making an unusually pronounced leftward swing. With parliamentary elections due in April, many GNP members fear losing their seats.
“Angry” young voters are thought to have punished the GNP in October’s Seoul mayoral by-election, selecting the independent Park Won-soon ahead of Na Kyung-won, the ruling party’s candidate. The ratification of Korus without the support of opposition parties could cause further subsidence of the GNP’s ratings in opinion polls. At the time of writing, a group of several thousand anti-FTA protesters was gathered in Yeouido, outside the parliament building.
Interestingly though, it’s the Korean youth who are angry. Who are worried they are going to lose jobs to those American sweatshops. And those slave union wages.
Of course, this is what you would expect the American Left would be saying. And the American youth. Who point to free-trade agreements as domestic job killers. So if both sides of a free-trade agreement claim that the agreement will kill domestic jobs one has to be somewhat suspect of such a dubious claim. Both sides can’t be losers. For there would be no reason to enter into an agreement. So if both sides are affected the same, and both sides can’t be losers, then both sides must be winners. Simply by the lack of options.
So why do the youth complain on both sides of a free trade agreement? Because free trade stimulates economic activity. And creates jobs. Which is apparently something the youth in both countries don’t want.
Tags: America, domestic job killers, free trade, free trade agreement, income inequality, Korean, Korus, youth protests, youth unemployment
Week in Review
When it comes to insulting world leaders what’s worse? Someone throwing a shoe at George W. Bush? Or this (see News woman shows her middle finger to President Obama on live TV posted 11/23/2011 on Your Jewish News)?
In the footage, Tatyana Limanova, an award-winning senior newsreader at the channel, can be seen briskly reading out an item about how Russian President Dmitry Medvedev has just assumed the rotating chairmanship of the Asia Pacific Cooperation organisation.
She is then heard to say that the post “has (previously) been held by Barack Obama” before mechanically and unambiguously raising her left arm and showing the camera her raised middle finger in an offensive gesture that is sometimes known as “flipping the bird.”
The channel, which goes out to 120 million people across Russia, has declined to comment. But sources close to it have tried to defuse the row by claiming that the newsreader had believed she was off camera at the time and merely providing a voice-over for a report. According to the same storyline, the rude gesture was intended for studio technicians who had been trying to put her off her stride.
REN TV has traditionally been perceived as a more liberal channel in a country where TV content is tightly controlled by the state. But it is now controlled by structures owned by a close ally of Vladimir Putin, the prime minister, and has been criticised for allegedly becoming more slavish to the Kremlin.
The scandal comes at a time when US-Russia relations appear to be getting worse after President Obama’s much-heralded attempt to “reset” them.
So much for that “reset.” She, Putin and Russia made it perfectly clear what they think of President Barack Obama. Which is probably worse than some lone shoe-thrower throwing a shoe at George W. Bush. Because this ‘finger’ appears to have the full weight of the state behind it.
Perhaps the next President can ask George W. Bush to go to Russia to fix US-Russian relations. If he only gets another shoe thrown at him at least it will show a warming trend in US-Russian relations. Anything would be better than getting the full weight and force of the bird being thrown our way.
Tags: Barack Obama, George W. Bush, middle finger, Putin, reset, Russia, Russians, the bird, throwing a shoe, US-Russian relations
Week in Review
The Keynesian economists are out again saying that we need to tax the rich more. Because lower tax rates for the rich don’t have a net economic benefit. Just as lower tax rates for the poor and middle class don’t have a net economic benefit. Because if a higher tax rate makes them work one hour less, they get one less hour of pay. And have one less hour of pay to spend in the market place. Ergo, it is a wash. For rich and poor alike. But the rich can afford it more easily so we should tax them instead of the poor and middle class.
This is macroeconomics groupthink. By a bunch of elitist who think they know better than everyone else in the world. They do understand some economic basics (see Somebody has to pay for government posted 11/23/2011 on The Economist).
If you tax rich people less, you tax regular and poor people more. And when you tax them, they, like rich people, have a certain propensity to work less (“deadweight loss”). Also like rich people, the money they pay in taxes is money they cannot spend, which leads to lower economic activity and lower GDP in the short run.
But make all the wrong conclusions.
Higher taxes mean people have less money to spend. They got that right. But all their theory is based on one great fallacy. And that fallacy is this: All government spending is necessary. And therefore must be paid for with taxes.
Contrary to Keynesian belief, all government spending is not necessary. In fact, most of their spending is not necessary. And should be cut. The intent of the Founding Fathers is clear. The federal government was not to be a nanny state. Being a nanny state is nowhere enumerated in the Constitution. This growth of the federal government has only created a privilege class. And they have risen to rule us by getting as many of us as possible dependent on their ‘generosity’. Which, ironically, was the point of the Revolution. To end rule by a privileged class.
So when you look at federal spending in this light the argument of who should pay the taxes is a moot point. Spending should be cut. Meaning taxes should be cut. Not increased. On anyone.
Arguing not to increase taxes on anyone is a good argument to make. Because it transfers the argument past the veneer of fairness to what it actually is. An out of control federal government spending money wastefully and recklessly to buy votes.
Tags: economic, federal government, Founding Fathers, government spending, Keynesian, Keynesian economists, privileged class, spending, tax rates, taxes, wasteful government spending