Monthly Archives: November 2012

The Obama Ransom

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The Wall Street Journal described the broad reach of President Barack Obama’s tax increases, which are set to occur in six weeks unless Republicans pay the ransom on the 98% of Americans which he’s demanding.  Here’s the effect on lower income Americans.

A married couple making between $20,000 and $30,000 a year would go from receiving, on average, a $15 tax credit to owing $1,408, according to research by the Tax Policy Center, a joint venture of the Brookings Institution and the Urban Institute.

The situation of an individual from the higher end of that range makes manifest that impact.

Traci Petty, 42, [is] a single mother…studying for a master’s in business administration in Danville, VA, while earning about $30,000 a year working part-time at a nonprofit.

Ms Petty would be hit by the shrinking of the child credit to $500 from $1,000, the higher payroll taxes and the elimination of the Bush-era 10% tax bracket.  Altogether, she would face at least a $1,500 cut in the $4,000 or so tax refund she gets each year.  She counts on the refund to pay bills.

But then, we’ve seen no evidence Obama even cares about these folks; his rhetoric focuses on “helping” the middle class and abusing those Americans at the upper end of the economic scale whom he hates so much.

A Market Parallel

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Amity Shlaes has noted some interesting parallels between today’s economic situation and that of 1937, post reelection of another Progressive President (she’s politer than I am).

In this case, “1937” means a market drop similar to the one after the re-election of another Democratic president, Franklin D. Roosevelt, in 1936.

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[T]he parallels are visible enough to be worth tracing.  They have to do with the danger of big government, and can be captured in a few categories.

Here are those parallels [emphasis added]:

Pre-election spree that sets records.  In the old days, federal spending amounted to about 19 percent or 19.5 percent of gross domestic product. …[from that] federal spending would have dropped back once the worst of the 2008 economic crisis passed.

…even in 2012, when the crisis was long past, the government went on a spree, spending the equivalent of 24.3 percent of the economy, more than the 24.1 percent for the year earlier.

Up until 1936, federal spending flowed at smaller levels than the spending by states and towns combined, with wartime being the exception.  Roosevelt slowly ratcheted up the outlays, and in 1936, Washington spent more than the states and towns.  This shift was dizzying for a country based on the principle of federalism, of strong states.

 

Fearsome attack on the status quo.  In his first news conference on Nov 14, Obama went out of his way to make clear his tax increases would fall on the rich: “What I’m concerned about is not finding ourselves in a situation where the wealthy aren’t paying more or aren’t paying as much as they should.”

Roosevelt was also ferocious, telling the old guard: “I should like to have it said of my first administration that in it the forces of selfishness and of lust for power met their match. I should like to have it said of my second administration that in it these forces met their master.”

When Roosevelt followed through in 1937, both with high taxes and his effort to pack the Supreme Court with more progressives, markets shivered.

Shlaes concludes with

The obvious question is why an announcement by Obama or Roosevelt to cut back just after the election doesn’t reassure those who dislike government expansion.

The answer is that the markets, which observe a giant march forward and then a step backward, don’t believe the step back is permanent.  Giants are giants.  Expansionists tend to revert to expanding government….

In the end, FDR’s Treasury Secretary, Henry Morgenthau, learned that lesson:

We have tried spending money.  We are spending more than we have ever spent before and it does not work.  I want to see this country prosper.  I want to see people get a job.  I want to see people get enough to eat.  We have never made good on our promises.  I say after eight years of this administration, we have just as much unemployment as when we started.  And enormous debt to boot.

The Obama administration, unfortunately, has no Treasury Secretary, or anyone else, capable of (re)learning that lesson.

Why should we care about the stock market, though?  The problem with significant drop in overall market stock prices isn’t just one of hammering rich investors and any workaday American with an IRA, a 401(k), or a 403(b) retirement account.  It’s that selling shares in a company is one of two ways in which businesses raise money (the other being borrowing) for product development or business expansion, either of which means prosperity for the company and, oh by the way, more jobs.  A significant market drop, then, closes off one more avenue for business expansion, jobs, and economic recovery.

A “Cease Fire”

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Here are some thoughts on the cease fire just…negotiated…between Israel and Hamas.  These thoughts come against the backdrop of two concerns.  For one, how is it possible to negotiate with terrorists?  Their behavior makes them fundamentally untrustworthy.  This is illustrated by Hamas’ own behavior in the past: every cease fire to which they’ve pretended to agree has been broken by their own terrorism, most often by a simple renewal of rocket attacks against Israeli civilians and their children.  For another, I listened to Israeli Prime Minister Benjamin Netanyahu’s speech announcing to his country the current cease fire.  His diction and tone of voice were that of a defeated man.  He knows Israel lost this latest overt war.

Now let’s read between the lines of Jennifer Griffin’s article for Fox News.

…Hamas spokesmen had leaked to the press that the cease-fire would begin at 9 pm local time on Tuesday, but that was before [Secretary of State Hillary] Clinton had landed in Jerusalem.  It would take another 24 hours for the deal to be finalized.

Not even Hamas’ MFWIC, Ismail Haniyah, would have been foolish enough to make such a claim in the absence of an agreement.  Doing so, far from pressuring Israel, would have been seen for the blatant desperation that an empty claim would have been.  There was a cease fire agreement in place; its announcement and implementation were delayed for 24 hours—and for one more Hamas act of terrorism, a bus bombing in Tel Aviv—so that our own Secretary of State could arrive in country [emphasis added]:

In the official statement released by the White House Wednesday

The President commended the Prime Minister [of Israel] for agreeing to the Egyptian cease-fire proposal—which the President recommended the Prime Minister do.

Moreover, the Israelis were prevented from responding to the bus bombing, even to the extent of delaying for another day or two implementation of the cease fire.  Instead, the US pushed Israel into agreeing just hours after that atrocity.  This was a cessation of fighting for which Israel was not ready and which Israel was pressured to accept, hence Netanyahu’s air of defeat.

What came out of this foisted cease fire?

There was no talk of disarming Hamas or preventing the re-arming of Hamas….

And

The deal elevates Iranian proxy groups such as Islamic Jihad and Popular Resistance Committees who can serve as spoilers and decide to fire more rockets into Israel.

And

…this truce really elevates Hamas as a power player as opposed to an underground terror movement.

On a practical level, Hamas is left with some 8,000 rockets and associated launch facilities intact, its Command and Control facilities and personnel damaged but functional, and its cottage industry of in-Gaza rocket and launcher manufactury still functional.  The Israeli goal of crippling Hamas’ war fighting capacity was cut off midgame.

On the other hand,

“The goal must be a durable outcome that promotes regional stability and advances the security and legitimate aspirations of Israelis and Palestinians alike,” Clinton said in Cairo.  “We appreciate President Morsi’s personal leadership and Egypt’s efforts thus far.

Egypt’s president, a member of the Muslim Brotherhood, now will be held accountable if Hamas or anyone else fires rockets from Gaza into Israel.  On the line is $1.5 billion dollars in U.S. aid to Egypt.

But what is the value of such an accountability and of this particular example of moral equivalence?  Islamic governments have a long and venerable history of putting their own interests above those of their people: we’ll cut off Egypt’s aid?  Pssh.  On the other hand, this “accountability” of Egyptian President Mohamed Morsi Isa El-Ayyat can work to his favor.  With the Muslim Brotherhood universally and lethally anti-Israel (if there’s one thing these guys agree with Persian mullahs about, it’s that Israel must be destroyed), the rearming and refitting of Hamas through the Sinai and the Egyptian border with Gaza will simply make Morsi look good in the shower where it counts, the anti-Israel community.

On top of this, as Spiegel Online International reports, the Israelis were forced to elevate Morsi themselves in the eyes of anti-Israeli terrorists for helping the Israelis with Hamas:

Israeli Foreign Minister Avigdor Lieberman saw it necessary to thank Morsi for his role in bringing about a truce.

And the US now accepts Israel and terrorists on the same plane.

So again, what has come out of this cease fire?  Increased danger to Israel, with an increasingly uncertain ally standing near it.

Fairness

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Columbia College Chicago Professor of Philosophy Stephen T Asma is quoted in a recent Wall Street Journal:

Our contemporary hunger for equality can border on the comical.  When my six-year-old son came home from first grade with a fancy winner’s ribbon, I was filled with pride to discover that he had won a footrace.  … “No, it wasn’t just me,” he explained.  “We all won the race!” …. Everyone who ran the race was told that they had won, and they were all given the same ribbon.

More troubling than the institutional enforcement of this strange fairness is the fact that such protective “lessons” ill-equip kids for the realities of later life. … The focus on equality of outcome may produce a generation that is burdened with an indignant sense of entitlement.

Oh, wait….

Overregulation?

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Is this an example?  Shalini Ramachandran described Dish Network’s travails in expanding into the cell phone network.

The Federal Communications Commission is leaning toward putting limits on how [Dish Network Corp Chairman Charlie] Ergen can use the billions of dollars of spectrum he controls, FCC officials said.

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The commission…is seriously considering requiring him to limit his use of a slice of the spectrum to protect against interference on a neighboring spectrum band, the officials said—a move that Mr. Ergen said in an interview Thursday “would be a game changer for us.”

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Current FCC rules require operators using satellite spectrum to offer handsets with a satellite chip, making the devices more expensive.  Dish has been awaiting the FCC’s decision on whether to allow the satellite operator to use its spectrum for a solely ground-based cellular network.

…FCC is close to approving Dish’s request, but with a buffer zone in which Mr Ergen could only operate at low power, which could mean worse wireless service.  …that limit would reduce the capability of Dish’s “uplink” spectrum—which handles the pathway from the cellphone to the tower—by 25%.  An additional 25% on top of that would be impaired due to interference…endangering Dish’s ability to compete in the wireless business….

This raises some questions in my poor, plebeian mind.  An FCC mandate concerning how a private entity might use his private property would seem to be an interference with the property rights of that private entity.  Is the restriction actually necessary to protect the neighboring property owner’s rights?

Should government be involved before the two private entities have had a chance to try to work things out on their own?

How does a satellite chip that uses a part of the spectrum create less interference from that spectrum than the absence of such a chip and continued use of that same spectrum?