New York Mayor Bill de Blasio paid a lower effective tax rate than Mitt Romney and Warren Buffett

Posted by PITHOCRATES - April 16th, 2014

Week in Review

The problem with Republicans is that they are so greedy that they put money before people.  That’s why they oppose taxes.  Because they don’t want to give up any of their money.  At least, this is what Democrats say about Republicans.  Along with the ‘tax cuts for the rich’ mantra.  In fact, they castigated Mitt Romney for only paying an effective tax rate of 14% in 2011.  Even Warren Buffet decried the unfairness of the tax code where rich guys like him pay an effective tax rate of 17.4% while the poorer classes working beneath him paid on average 35%.  Even his secretary paid a higher tax rate.  And that just wasn’t fair.  Of course Buffet’s 17.4% in actual dollar amounts dwarfed the tax dollars of everyone working for him combined.  But that’s not the point.  No, the point is that Republicans are all a bunch of greedy, vicious, heartless bastards.

New York’s new mayor is a Democrat.  And he isn’t a greedy, vicious, heartless bastard.  In fact, he promised to raise taxes on those rich fat cats who pay as little as a 14% effective tax rate.  Something he would never do himself.  Because he’s not a greedy, vicious, heartless bastard.  He’s a Democrat (see New York Mayor Bill De Blasio Pays A Lower Tax Rate Than Mitt Romney by Hunter Walker posted 4/16/2014 on Business Insider).

Democratic New York City Mayor Bill de Blasio became a prominent proponent of progressive tax policy when he made raising taxes on city residents who make over $500,000 a year a cornerstone of his platform during his underdog campaign last year.

That’s why it raised eyebrows and drew some initial national coverage when The Wall Street Journal reported Tuesday that de Blasio had paid an “effective tax rate” of 8.3%.

That would put de Blasio’s tax rate substantially lower than the approximately 14% tax rate multimillionaire former Republican presidential nominee Mitt Romney was attacked by Democrats for paying in 2011.

Well, somehow it works out that a Republican paying a 14% effective tax rate is a greedy, vicious, heartless bastard but a Democrat paying 8.3% is not.  Go figure.

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Oil Trains Derail as President Obama tries to Enrich his Rich Billionaire Friends

Posted by PITHOCRATES - January 4th, 2014

Week in Review

If there are two things President Obama doesn’t like they are rich people and oil.  Well, at least he acts that way.  Espousing more concern for the working man.  And clean energy.  Which is why President Obama said “no” to the Keystone XL pipeline.  Or could there have been another reason (see BNSF opens North Dakota track as oil by rail faces more scrutiny by Nicholas Sakelaris posted 1/2/2014 on the Dallas Business Journal)?

Burlington Northern Santa Fe re-opened the double track Thursday morning outside Casselton, N.D., where an oil train collided with a grain train, causing a massive fireball-like explosion earlier this week…

Fort Worth-based BNSF hauls an estimated 750,000 barrels of crude oil per day. The railroad carried an estimated 100 million barrels of crude oil out of the Bakken in 2012, a massive increase from previous years.

You know who owns Burlington Northern Santa Fe (BNSF)?  Warren Buffett.  For BNSF is a wholly owned subsidiary of Berkshire Hathaway.  So Warren Buffet is profiting greatly from President Obama’s rejection of the Keystone XL pipeline.  One can’t help to wonder if that has anything to do with the Buffett Rule (see Buffett would profit from Keystone cancellation by Dave Boyer posted 1/24/2012 on The Washington Times).

Warren Buffett, whom President Obama likes to cite as a fair-minded billionaire while arguing for higher taxes on the wealthy, stands to benefit from the president’s decision to reject the Keystone XL oil pipeline permit.

Mr. Buffett’s Berkshire Hathaway Inc. owns Burlington Northern Santa Fe LLC, which is among the railroads that would transport oil produced in western Canada if the pipeline isn’t built…

If completed, the $7 billion Keystone XL would deliver 700,000 barrels a day of crude from oil sands in Canada to Texas refineries on the coast of the Gulf of Mexico. It would traverse about 1,600 miles.

The State Department’s review of the project said shipping oil via rail is more costly than delivering it to refineries by pipeline.

Mr. Obama often cites Mr. Buffett as an example of a civic-minded billionaire because the entrepreneur has said he should pay a higher tax rate than his secretary. Mr. Buffett and the president like to tell the story of how Mr. Buffett pays a 15 percent effective tax rate, while his secretary pays a higher rate even though she earns only a fraction of what he does.

The president has called his push for higher taxes on the wealthy the “Buffett rule.”

Funny.  Warren Buffett says we should tax rich people more and the Keystone XL pipeline doesn’t get built.  Instead that oil goes on Buffett’s trains.  Making him a lot of money.  Just like the president’s rich friends on Wall Street are making a lot of money.  Who have all gotten richer under the Obama presidency while median family income fell for Main Street.  So more oil is traveling across the country.  Some of which is derailing and soaking into our pristine environment.  Or exploding.  While rich people are getting richer.  And President Obama would have us believe he’s for the working man and clean energy.

It would seem President Obama is more for getting Democrat supporters rich than helping Main Street.

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LESSONS LEARNED #85: “The rich pay more than their fair share of income taxes to provide tax relief for the poor and middle class.” –Old Pithy

Posted by PITHOCRATES - September 29th, 2011

Investors Pay a Lower Tax Rate on Investment Income because Investing is Riskier than Earning Income

There’s a lot of class warfare going on right now.  It’s open season on anyone deemed to be rich.  You have President Obama saying the rich don’t pay their fair share of taxes.  That it isn’t right for Warren Buffett’s secretary to pay her taxes at a lower tax rate than her boss.  Statements like this can be very misleading.  Because Warren Buffett’s secretary pays nothing in tax dollars compared to what Warren Buffett pays.  But it sure fans the flames of class warfare.  Which helps when you want to raise taxes on someone.  (Or get reelected).  Because no one wants their own tax rates to go up.  Just those on others who make more than they do.

Except, of course, Warren Buffett.  And some other millionaire investors.  Who are asking President Obama to raise their taxes.  And he has obliged.  At least, he’s trying.  He wants to implement a millionaire’s income tax.  A little extra from those who can most afford it.  Of course, Warren Buffett won’t pay this millionaire’s income tax.  Because he doesn’t pay income taxes.  He’s an investor.  He pays capital gains taxes.

Investors pay a lower tax rate on capital gains than on income.  Because investing has risk.  Working doesn’t.  You never risk losing your income by working.  But you risk your capital by investing.  Hence the lower rate to encourage this risky behavior.  Investing in others.  Like entrepreneurs.  Some of who strike it rich.  Many more, sad to say, fail.  And investors lose everything they invested.  It’s a risky business for investors.  That’s why when their investments pay off they pay off big.  To cover all of those investments where they lost everything.  Raising tax rates on investors, then, would dissuade investment.  Stop the job and wealth creation these successful  entrepreneurs provide.  And deprive the treasury of all the tax revenue they would have created.

The Rich are Paying a Premium in Taxes for being Successful

Let’s look at some data.  Let’s mine some IRS tax returns.  See who is paying income taxes.  And who isn’t paying their fair share.  Let’s break the numbers down into 4 groups.

The poor and middle class (those earning up to $50,000 per year).  The middle class/upper middle class (those earning from $50,000 to $100,000).  The elite white collar and small business owners (from $100,000 to $500,000).  And the rich (over $500,000).  These breakdowns and labeling is not an exact science.  But it’s close enough for analysis.  Below we’ve graphed both percent of total income.  And percent of total taxes paid.  For each of these groups.  All data is mined from SOI Tax Stats – Individual Income Tax Rates and Tax Shares.  And crunched in an Excel spreadsheet.

These are the rich people.  Note that they pay a larger percentage of total taxes than their percentage of total income.  The red line is always well above the blue line.  On average their share of taxes is 8.54% greater than their share of income for the years graphed.  So the rich are paying a premium in taxes for being successful.

Of particular interest is what happens to the rich during a recession.  At both the early and late 2000s recessions their share of income tanked.  As did their share of taxes.  Their share of total taxes fell some 5% in the early 2000 recession.  With a third or so of all taxes coming from these rich, when they lose money so does the U.S. treasury.  This quickly revised those Clinton projected surpluses into deficits.  And it wasn’t anything George W. Bush did.  This was the fallout from the bursting of the dot-com bubble (it was the irrational exuberance that made all of this wealth and tax revenue in the first place.  That and the Lost Decade in Japan.  Not the Clinton tax rate hikes).  Rich people lost money; rich people paid less taxes.

And speaking of Democrat Bill Clinton, note how the rich got richer when he was president.  Not what you would expect from a Democrat.  The champions of class warfare.  But it is true.  While Bill Clinton was president the rich’s slice of the income pie grew approximately 10.51%.  Gee, I wonder what happened to the poor and middle class during this same time.

White Collar Workers and Small Business Owners have a Tax Share Greater than their Income Share

Now let’s take a look at the elite white collar workers and small business owners.  Management, professionals, doctors, lawyers, entrepreneurs, etc.  Here we see that they, too, pay a larger percentage of total taxes than their percentage of total income.  But not as much.  Their tax premium for success is not as great as it is for the rich.  It averaged approximately 3.42% for the years graphed.

Note that the recession didn’t have as great as an effect on them as it did for the rich.  They don’t have as much to gamble with.  The less risk the less reward.  And the fewer losses.  Besides, with small business owners slow and steady wins the race.  They pour all of their investment capital (i.e., their earnings) into their businesses.  And then work 80+ hours a week to wring out every last dime from that investment.

Some industries weather recessions better than others.  Some just get by.  Conservative by nature, they expand during good times.  But not too much that they can’t sustain the larger size during bad times.  For they aren’t rich enough to absorb large losses during really bad times.  Unlike rich investors.  So their income growth is flatter.  But more steady.

The Middle Class/Upper Middle Class have a Tax Share Less than their Income Share

Now the middle class/upper middle class.  Those earning from $50,000 to $100,000.  Typically those living well while still working for someone else.  Note that their share of the tax burden has been in a decline.  Much like their income.  However bad that is, they do pay a smaller percentage of the total tax than their percentage of total income.  The blue line is above the red line.  In other words, they have a tax discount.  A discount that has averaged 5.33% over the years graphed.

Interestingly, these graphs are almost the mirror image of those earning $500,000 or more.  Particularly strange is that their share of the income increases during times of recession.  Which probably reflects their incomes being a larger percentage of the remaining pie after the rich lose so much during bad economic times.

Did the Poor and Middle Class get Poorer under Bill Clinton?

And now the poor and middle class.  Whose share of the tax burden has also been in decline.  As has been their income.  But they, too, pay a smaller percentage of the total tax than their percentage of total income.  Their tax discount has averaged 6.62% for the years graphed.  Which is even more generous than that given to those earning $50,000 to $100,000.

Remember how the rich got richer under Democrat Bill Clinton?  Well as they got richer the poor and middle class got poorer.  Again, not what you would expect from a Democrat in office.  While Bill Clinton was president the poor and middle class’ slice of the income pie decreased approximately 11.85%.  Can this be true?

When the Rich get Richer the Poor get Fewer in Numbers

Well, yes and no.  If you look at the number of returns filed you find out something interesting.  Not only did income decrease for those earning $50,000 or less, their numbers shrank, too.  To illustrate this we’ve compared the number of income tax returns for our income group breakdowns for the years 1996 and 2000 (the beginning and end of the Clinton years for the data graphed).

There was a net decline of 8.85% of people earning $50,000 or less.  Where did they go?  To a higher income group.  The poorest earners in our breakout decreased in numbers.  While the higher income groups all increased in numbers.  Meaning when the rich get richer the poor get fewer in numbers.  In other words, a rising tide raises all boats.

The Best Way to Raise Tax Revenue is to let Rich People get Rich

So what have we learned?  First of all, the rich pay more than their fair share in taxes.  In fact, they pay a portion of the taxes of those earning less than them.  That is, the rich provide tax relief for the poor and middle class.

So the rich getting richer is good.  The richer they get the larger percentage of the total tax burden they pay.  And the more people they move from lower income groups to higher income groups.  By providing investment capital to entrepreneurs.  Who create jobs.  That give the poor and middle class better opportunity.

And the more jobs the more taxpayers there are.  So you have the rich getting richer and paying more taxes.  And these new employees in higher paying jobs paying more in taxes.

Now that’s good tax policy.  If your goal of tax policy is to raise tax revenue.  And if it is then the best way to do that is to let people get rich.

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Obama uses a Joint Session of Congress for a 2012 Campaign Speech on Jobs

Posted by PITHOCRATES - September 9th, 2011

The Obama Jobs Speech was the Same Old Same Old with the Angry turned up to Eleven

The big speech was last night.  President Obama‘s Jobs speech.  After waiting with bated breath.  For him to come back from vacation.  On Martha’s Vineyard.  Where no one wants for a job.  Or anything.

What you thought of it depends on your party affiliation.  If you’re a Big Government liberal Democrat that wants to stick it to the rich, I’m sure you liked it.  If you were looking for substance, I’m sure you were disappointed.  It was just the same old same old.  With the angry turned up to eleven.

Here are some selections from the transcript with commentary (see Obama jobs speech transcript: Full text (as delivered) posted 9/8/2011 on Politico).

These men and women grew up with faith in an America where hard work and responsibility paid off. They believed in a country where everyone gets a fair shake and does their fair share — where if you stepped up, did your job, and were loyal to your company, that loyalty would be rewarded with a decent salary and good benefits; maybe a raise once in a while. If you did the right thing, you could make it. Anybody could make it in America.

For decades now, Americans have watched that compact erode. They have seen the decks too often stacked against them. And they know that Washington has not always put their interests first.

Yeah, it used to be like that.  Until greed set in.  Government greed.  Their insatiable want of private sector wealth.  And power over our lives.  High taxes.  And punishing regulations.  These have hurt American businesses that once provided those fair shakes.  It’s President Obama and his party that have been making this a business unfriendly nation.  Giving American businesses an unpleasant choice who struggle to compete.  Either close.  Or conduct business in a country that lets them compete.

Just look at the effect of Obamacare.  All hiring is frozen.  And those who can get Obamacare waivers are.  The communist Chinese don’t have these problems.

The question is whether, in the face of an ongoing national crisis, we can stop the political circus and actually do something to help the economy.

He says as he scolds the American people.  And our Republican representatives.  Yelling at us.  Scowling at us.  Fed up with us.  Because he is not getting his way.

Ultimately, our recovery will be driven not by Washington, but by our businesses and our workers.

Absolutely right.  And the best thing Washington can to is to stop helping.  Their tax and regulatory policies are smothering economic growth.  You want to help?  Then get out of the way.  And let business do what business does best.  Grow.  And create jobs.  To meet demand.  That the market is demanding.  Not building what the government thinks is best.

I am sending this Congress a plan that you should pass right away. It’s called the American Jobs Act. There should be nothing controversial about this piece of legislation. Everything in here is the kind of proposal that’s been supported by both Democrats and Republicans — including many who sit here tonight. And everything in this bill will be paid for.

That urgent is it?  Urgent.  But not so urgent to cancel your luxurious vacation on the exclusive Martha’s Vineyard?  Where the rich and famous vacation to get away from people like us.  You know, if it could wait until after Martha’s Vineyard, it can’t be that important.

Democrats and Republicans support everything in this plan?  If so why isn’t this already law?  If not important before, why is it now?  Some two and a half years into your presidency?  And some two and a half years after applying your laser-like focus on job creation?

It will create more jobs for construction workers, more jobs for teachers, more jobs for veterans, and more jobs for long-term unemployed.

Jobs for teachers?  There’s nothing stimulative about that.  They don’t hire workers.  And the kids they teach aren’t going to hire any workers for a very long time.  This is just more money for teachers’ unions.  Which will be funneled back to the Democrat Party via union dues.

We pay teachers with tax dollars.  Paid by the taxpayers.  This is money the government transfers from the private sector economy to the public sector teachers.  So before teachers can stimulate with this money the private sector has to lose it first.  They take a large sum of money from the private sector.  And give it to the teachers.  Less administration costs to make this all happen.  To stimulate the private sector economy.  Which means the teachers spend less money than the private sector would have if they were able to keep their money.  This is a net loss of economic activity.  And is not stimulative.

Teachers are like government.  They provide an important service.  But they are taxpayer financed.  And like anything taxpayer financed, they are a drag on the economy.

More shovel-ready construction projects?  You told us yourself there is no such thing as a shovel-ready project.  This won’t be stimulative either.  Construction projects just don’t happen overnight.  Even if you get rid of all the regulatory red tape.  Projects take months to engineer.  If you cut that short there will be cost overruns to correct all the things missed in the engineering process.  Then there’s the asbestos abatement study.  Lead abatement.  Environmental impact studies.  At best these will start hiring in time for the 2012 election campaign.  Which no doubt is the goal.

It will provide — it will provide a tax break for companies who hire new workers, and it will cut payroll taxes in half for every working American and every small business. (Applause.) It will provide a jolt to an economy that has stalled, and give companies confidence that if they invest and if they hire, there will be customers for their products and services. You should pass this jobs plan right away. (Applause.)

If tax breaks are good for businesses then just cut tax rates.  A tax rate cut is more stimulative than a onetime tax credit.  A tax credit does not instill business confidence.  Because hiring a new employee is far more costly than any onetime tax credit.  Especially with Obamacare bearing down on small businesses.  It’s these permanent costs of current tax and regulatory policies.  These are what are keeping business skittish about expanding and hiring.  And a onetime tax credit won’t change that.  A repeal of Obamacare would probably spark some business growth.  But not a targeted tax credit.

Pass this jobs bill — pass this jobs bill, and starting tomorrow, small businesses will get a tax cut if they hire new workers or if they raise workers’ wages.

Wishful thinking.  Whoever came up with this is an economic simpleton.  He might as well have asked everyone to voluntary pay more for their groceries.  So the stores will hire more people with all that additional profit.  Employees are another cost of doing business.  Voluntarily increasing these costs above the market cost will only make these businesses less competitive in the market place.  Threatening their business.  And all the jobs they currently provide.

It’s not just Democrats who have supported this kind of proposal. Fifty House Republicans have proposed the same payroll tax cut that’s in this plan. You should pass it right away. (Applause.)

Yes, payroll tax cuts are good.  They reduce the cost of doing business.  And let employees keep more of their earnings.  So cutting Social Security and Medicare taxes will help.  But this will only set up higher taxes down the road.  Because these programs are going broke.  Businesses understand this.  They know it will only be temporary.  And illusionary.  For they will pay more in the future.  So they aren’t going to hire more now.

Building a world-class transportation system is part of what made us a economic superpower. And now we’re going to sit back and watch China build newer airports and faster railroads? At a time when millions of unemployed construction workers could build them right here in America? (Applause.)

No.  It didn’t.  We took over the title of economic superpower from the British before the federal highway bill.  And private industry built the railroads.  And robber barons.  Sure, government helped.  But it didn’t lead the way.

China?  Really?  Why is China building so much infrastructure?  Because they have cheap labor.  They couldn’t do what they’re doing if their labor costs were the same as ours.  And that high-speed rail system?  They’re now questioning quality and safety.

And there are schools throughout this country that desperately need renovating.

According to my calendar it’s September.  And I’m pretty sure it’s September throughout the country.  Which means what?  That’s right.  The kids just went back to school.  Which means the next round of school renovation projects will take place starting next June.  When the kids get out of school.  Not very stimulative if you ask me.  Unless you just want a lot of people working on these school renovations during the 2012 election campaign.

And to make sure the money is properly spent, we’re building on reforms we’ve already put in place. No more earmarks. No more boondoggles.

Just like you promised your $800 billion stimulus wouldn’t contain any pork or earmarks?  When it was mostly pork and earmarks?  Fool us once shame on you.  Fool us twice shame on us.

And we’ll set up an independent fund to attract private dollars and issue loans based on two criteria: how badly a construction project is needed and how much good it will do for the economy. (Applause.)

Great.  Nothing guarantees to speed things up like making it go through a new government bureaucracy.  Which can better send money to friends of the administration.  Just like that $800 billion stimulus.

Pass this jobs bill, and companies will get a $4,000 tax credit if they hire anyone who has spent more than six months looking for a job.

Let’s crunch some numbers.  Say you hire someone.  Pay them $30,000.  Your half of Social Security and Medicare taxes come to $2,295 for the year.  Now factor in your other costs.  State and federal unemployment insurance.  Workers’ compensation insurance.  Health care.  Etc.  Not to mention their salary.  It adds up to a lot of money.  Far more than that $4,000 tax credit.  For hiring someone they don’t need to support their current level of business.  And you know what?  A smart business owner isn’t going to do this.

The plan also extends unemployment insurance for another year. (Applause.) If the millions of unemployed Americans stopped getting this insurance, and stopped using that money for basic necessities, it would be a devastating blow to this economy.

The government has to take that money out of the private sector economy first.  Before it can pay unemployment benefits.  Someone is still spending that money.  Just a different someone.  By the time you add in the cost of administering those benefits, there is a net loss in economic activity. 

Unemployment benefits help the unemployed while they look for another job.  They don’t stimulate the economy.

The agreement we passed in July will cut government spending by about $1 trillion over the next 10 years. It also charges this Congress to come up with an additional $1.5 trillion in savings by Christmas. Tonight, I am asking you to increase that amount so that it covers the full cost of the American Jobs Act. And a week from Monday, I’ll be releasing a more ambitious deficit plan — a plan that will not only cover the cost of this jobs bill, but stabilize our debt in the long run. (Applause.)

Standard and Poor’s wanted to see $4 trillion in real spending cuts.  Not cuts in the out-years that will disappear in the next budget deal.  Real cuts.  If not they said they would downgrade the U.S. sovereign debt rating.  They couldn’t do it.  The best they could do was a $1 trillion tax cut over the next 10 years.  And by golly if S&P didn’t downgrade our credit rating.

And the special commission is to find another half trillion in spending cuts?  On top of the $1.5 trillion they were already looking for?  That Congress was unable to find?  And now they have to find $2 trillion?  Yeah, like that’s going to happen.  That’s a plan with but one goal.  Failure. 

With this kind of spending, a deficit reduction plan can only mean one thing.  More taxes.  Just what the economy needs.  Not.

While most people in this country struggle to make ends meet, a few of the most affluent citizens and most profitable corporations enjoy tax breaks and loopholes that nobody else gets. Right now, Warren Buffett pays a lower tax rate than his secretary — an outrage he has asked us to fix. (Laughter.) We need a tax code where everyone gets a fair shake and where everybody pays their fair share.

An executive secretary probably earns something north of $60,000 a year.  That puts her in a top marginal tax bracket of 25%.  Crunching the numbers and this executive secretary will pay $11,125 in federal taxes.  Now let’s assume Warren Buffet has a half billion dollars in investments that pay a return of 8%.  That’s a capital gain of about $40 million.  Taxed at a paltry 15% capital gains tax that’s a measly $6 million in federal taxes.  Funny.  His secretary has a higher tax rate.  But Buffet pays approximately 53,833% more in tax dollars.  I don’t know how you can say one person paying $40 million in taxes isn’t paying his fair share.

Should we keep tax loopholes for oil companies? Or should we use that money to give small business owners a tax credit when they hire new workers? Because we can’t afford to do both. Should we keep tax breaks for millionaires and billionaires? Or should we put teachers back to work so our kids can graduate ready for college and good jobs? (Applause.) Right now, we can’t afford to do both.

This isn’t political grandstanding. This isn’t class warfare. This is simple math. (Laughter.)

This is nothing but political grandstanding and class warfare.  And rather Orwellian.  In Nineteen Eighty Four, they just changed the meaning of words to control the people.  Such as slavery is freedom.  But changing the meaning of words doesn’t change what slavery is.  It’s still slavery.  No matter what you call it.  And political grandstanding and class warfare is political grandstanding and class warfare.  Even if you say it isn’t.

Now it’s time to clear the way for a series of trade agreements that would make it easier for American companies to sell their products in Panama and Colombia and South Korea -– while also helping the workers whose jobs have been affected by global competition.

America can’t compete with China because Chinese labor is cheaper.  So to make American products more competitive the president wants to subsidize our high cost of labor.  With American tax dollars.  Spread the higher cost of U.S. goods throughout the American economy.  Leaving everyone with less money for their own personal needs.  So we can keep Big Union working.  And supporting the Democrat Party.  Which will only increase government spending.  Our deficit.  And our debt.

To subsidize Big Labor they’ll have to pill that money out of the private sector economy first.  So you subtract X from the private sector economy.  And give X to Big Union.  Less an administration fee, of course.  Meaning that there will be a net loss of economic activity.

If we provide the right incentives, the right support — and if we make sure our trading partners play by the rules — we can be the ones to build everything from fuel-efficient cars to advanced biofuels to semiconductors that we sell all around the world.

The free market doesn’t need government incentives and support.  They did fine and dandy in the old days without any government help.  And making our trading partners play by the rules?  If you could do that they would be playing by the rules already.  There’s nothing you can do to make China stop undervaluing the yuan.  Unless you want to throw up protective tariffs on Chinese goods.  Of course they’ll retaliate.  Which will only make everything more expensive for the American consumer.  Besides, we already tried this.  Just before the Great Depression.

You really want to talk about the government picking winners and losers (i.e., incentives and support)?  Really?  After the Solyndra bankruptcy?  And the FBI raid on their executive homes?

Well, I agree that we can’t afford wasteful spending, and I’ll work with you, with Congress, to root it out. And I agree that there are some rules and regulations that do put an unnecessary burden on businesses at a time when they can least afford it. (Applause.) That’s why I ordered a review of all government regulations.

Didn’t Al Gore already reinvent government?  To root out wasteful spending and regulations?  Yeah, he did.  Or tried.  Turns out that’s a lot easier said than done.  Especially when you don’t really mean it.  I mean, come on, the Left lives and dies for these costly regulations.  They’re not just going to sit idly by and let them get repealed.  Not when they fund Democrat candidates in elections.

But what we can’t do — what I will not do — is let this economic crisis be used as an excuse to wipe out the basic protections that Americans have counted on for decades.

Really?  So you’re not going to let anyone do what you did?  Like Rahm Emanuel said, “You never want a serious crisis to go to waste.”  When you used the worst recession since the Great Depression to pass your stimulus?

Basic protections are one thing.  But your regulatory zeal has shut down this economy.  Just ask the Gulf oil workers.  If you can find any.  Because they aren’t working on rigs in the Gulf anymore.  Thanks to you.

We all remember Abraham Lincoln as the leader who saved our Union. Founder of the Republican Party. But in the middle of a civil war, he was also a leader who looked to the future — a Republican President who mobilized government to build the Transcontinental Railroad — (applause) — launch the National Academy of Sciences, set up the first land grant colleges. (Applause.) And leaders of both parties have followed the example he set.

The seeds of the first transcontinental railroad were sowed back in the 1830s.  Lincoln became president in 1861.  The NAS was established by an Act of Congress.  Land grant colleges came into being in with the Morrill Acts of 1862 and 1890.  First introduced in 1857.  Abraham Lincoln wrote the Emancipation Proclamation.  But he did not create these other acts of Congress.  Congress did. 

And the transcontinental railroad?  That was Congress, too.  And one of the most corrupt Congresses in history.  The incentives and support Congress gave encouraged them to build track on ice.  Zigzag to cover as much land as possible to claim the mineral rights beneath. And when east and west finally met, they kept building track.  Parallel to each other.  To keep collecting money for track mileage laid.  And the cost overruns made a lot of Congressmen wealthy.  No, this railroad was not America’s finest hour.

How many jobs would it have cost us if past Congresses decided not to support the basic research that led to the Internet and the computer chip?

The government Internet (DARPA) was nothing more than file sharing and email for scientists.  If private enterprise and entrepreneurs didn’t step in that’s what the Internet would still be. 

The computer chip?  Funny. I thought that was Texas Instruments and Fairchild Semiconductor.  Which was ultimately based on the transistor.  Invented in 1947 by John Bardeen, Walter H. Brattain, and William B. Shockley of Bell Labs.  Who replaced vacuum tubes with semiconductors everywhere.  Except in high-end audio amplifiers.

What kind of country would this be if this chamber had voted down Social Security or Medicare just because it violated some rigid idea about what government could or could not do? (Applause.) How many Americans would have suffered as a result?

Actually they’d probably be a lot better off.  As far as a return on investment, Social Security is one of the worst retirement investments out there.  Why?  Because it’s not an investment.  Your money goes into the Social Security trust fund.  Where it ‘waits’ for your retirement.  But before you do, the government takes that money and spends it.  Leaving an IOU in the trust fund.  This is no IRA.  No 401(k).  No mutual fund.  It’s not even a savings bond.  In fact, if you die before you collect, all that money you paid in is kept by the government.  It doesn’t go to your heirs with the rest of your estate.  Like an IRA, a 401(k) or a mutual fund would.

But Social Security has been a real success.  For the government.  Because it has made generations of people dependent on government in their retirement.  Who live in fear of losing their benefits.  And will do anything to keep those benefits coming.  Even if it means screwing their own children.  And their grandchildren.  They’re so frightened by the Democrats that they will vote Democrat.  No matter how much the Democrats steal from future generations.

I don’t pretend that this plan will solve all our problems. It should not be, nor will it be, the last plan of action we propose.

That’s right.  You never want a serious crisis to go to waste.  And they will milk this for all it’s worth.  Stimulus.  Bailing out the UAW pension funds (i.e., the auto bailout).  Financial reform.  Obamacare.  Everything they’ve always wanted.  But could never get through the normal legislative process.

The Problem with Barack Obama is that he’s a Keynesian who wants to Grow the Government

Once again the professor scolds those who don’t agree with him.  And offers more of the same.  Which has already failed to reverse the worst recession since the Great Depression.  And it’s not going to work this time.  How do we know this?  Because if this stuff worked it would have worked the first time.

And it would be nice to see the plan before our representatives pass the plan.  For as CBO said before, you just can’t score a speech.  We need to see the numbers.  And the leaps of faith.  But I guess it’s hard to quantify soaring rhetoric.  Especially when you’re offering the same thing.  That you’re trying to make sound different this time.

The problem with Barack Obama is that he’s a Keynesian.  With one slight difference.  Keynesian stimulus is supposed to be temporary.  Whereas Obama’s stimulus gets added into the baseline budget.  Making his stimulus spending permanent.  His number one goal isn’t growing the economy.  It’s growing the government.  That’s why his polices don’t help the economy.  But they sure have grown the government.  And in Obama’s book that’s mission accomplished. 

But he sure would like a second term to continue the fun.  But I just don’t see that happening.  For I can’t see how he can fool that many people into believing that they’re better off after four years of his policies.

www.PITHOCRATES.com

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