Monthly Archives: February 2013

Leadership

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Politico reports, on matters related to President Barack Obama’s claimed agenda, from immigration reform to deficit “pay down” to increasing taxes to… that

after months of buildup and a week since his State of the Union address, key aides on the Hill and at the White House acknowledge that even GOP senators who fit Obama’s vision of bipartisanship—Senators Mark Kirk of Illinois, Rob Portman of Ohio, Lamar Alexander of Tennessee, and Tom Coburn of Oklahoma—are all waiting to hear anything from the president.

More, Republicans from Speaker of the House John Boehnor (R, OH) to Senate Minority Leader Mitch McConnell (R, KY) and everywhere in between have vociferously decried Obama’s lack of leadership in failing to propose a concrete budget, a firm program of (tax increases and) spending cuts, a specifically laid out plan for avoiding the approaching sequester, a detailed plan for immigration reform (never minding that when he did “leak” a pretty specific immigration plan, Republicans angrily told him to butt out), etc.

What about Republicans’ own leadership?  Where’s theirs?  Where is the Republican proposal, passed by the House, that provides the next budget—and where is their explanation of already passed budgets in the last two years that addressed taxes and spending?  Where is the Republican proposal, already passed by the House, that addresses the pending sequestration?  Where is the Republican proposal for immigration reform, already passed by the House—or their tightly reasoned and widely presented argument for why certain aspects of immigration reform needn’t be addressed just yet?

Republican leadership means bellyaching about someone else’s lack of leadership?

What’s up with that?

Unions and Elections

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Who says unions don’t try to influence the outcomes of elections—at the ballot box itself, not via campaigning in a run-up to an election?

The image below, from a Wall Street Journal article about a Boeing engineers union contract election shows the degree to which a union will go to tell its members how to vote.                                                                                     

Sequester Extortion

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Last week, President Barack Obama granted a public appearance with suitable props—emergency medical personnel carefully arrayed behind him as he gave his appearance—wherein he said what he would do if he didn’t get his way on canceling his sequester.

He said he’d fire those very emergency medical personnel, along with cops and firemen, if he didn’t get his precious tax increases.  They’d be the first to go in the spending cuts he’d enact under the sequester.

This is dishonest on two fronts.  For one thing, those folks are paid by local jurisdictions; they’re not Federal employees—they’re not his to fire.

For another, the sequester represents the enormous sum of $85 billion in spending cuts this year, or 5% of the collective budget of his Executive Branch’s non-defense Departments and agencies and 7% of his DoD budget.  The leader of the party of great savings through eliminating fraud, waste, and abuse now is saying he can’t find a trivial 5% of fraud, waste, and abuse in any of his Cabinet Departments or any of his programs.  Or he’s refusing to look.

It’s going to be an ugly four years.

Poverty and Welfare

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The connection isn’t only moral.  It’s economic, also, as new research is showing.

Richard Vedder, an economics professor at Ohio University says that our exploding welfare state has led to an American poverty rate of 14%—these welfare programs actually are

creating a dependency on government, which is unhealthy both for the individuals involved and their children, and also for the broader society[.]

Specifically, Department of Labor statistics show four programs in particular contribute to  Americans’ increasing dependence on government.

  • Food stamps, or The Supplemental Nutrition Assistance Program, as it’s now known.  Nearly 30 million more Americans receive them than in the year 2000.
  • Social Security Disability: 3 million Americans  received payments in 1990—today it’s 8.6 million.
  • Pell grants: 3.9 million students were awarded them in 2000.  Today it’s 9.7 million, even though  nearly half of graduates work in jobs that require no degree.
  • And extended unemployment benefits: 26 weeks had been the standard—today it’s 52 weeks or more for many [and during the Panic of 2008 and ensuing Obama Recovery, it’s run as long as 99 weeks].

This isn’t just academic theorizing, though.  Doug McKelway, in his article at the above link, talked, among others, to a sandwich shop owner in Maryland:

Kyle Murphy…described how anecdotal evidence he sees as an employer jibes with Vedder’s assessment.  He often sees new hires quit to seek government benefits.

“The people who know how to use the system best get the most out of it.  It’s not necessarily the people who need the assistance the most,” he said.  Murphy has seen many of his employees quit jobs, then claim they were fired to obtain unemployment benefits.

Vedder concludes,

We have had nearly four decades with growing incomes, rising standard of living for the majority, yet the poor have grown in number even as a proportion of the population.  So some of these policies are not working.

I’m more cynical: since they create a captive collection of voters for the hander-outers in government, maybe they are working.  Never mind that the outcome puts our republic at risk.

A Foreign Tax on American Investors in America

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The European Commission earlier this month proposed a new financial-transaction tax for 11 participating states, including Germany, France, Italy, Spain, Belgium, Austria, Slovenia, Portugal, Greece, Slovakia, and Estonia.  These produce roughly two-thirds of the EU’s economy.

It’s an enormous tax, too, in a market where spreads are on the order of pennies, even fractions of pennies: 0.1% for trades in bonds and shares, and 0.01% for derivatives transactions, and it would apply to both buyers and sellers

as long as either of them is based in one of the participating states, or if the financial instrument being traded was issued in any of these countries.

As damaging as this tax is, they’re not done.  The tax is intended to suppress trading:

[The European Commission’s] own impact assessment estimates that the number and volume of trades in shares and bonds could drop by around 15%, while derivatives transactions may drop by as much as 75%.

Never mind that this activity—especially its volume—contributes to the liquidity of the instruments and so contributes to holding down their price to buyers.  Which facilitates more general investing in companies—their source of funds for R&D, plant expansion, even hiring.

But wait, there’s more: they’re claiming the right to tax folks outside their jurisdiction—we Americans, investing here in the US, for example, as a result of those domiciliary and passing-through aspects.

This tax will hurt us: Paul Jiganti, Managing Director of Market Structure and Routing Strategy at TD Ameritrade Holding Corp, estimates that

a typical [American] customer who pays $9.99 to buy 1,000 shares priced around $35 apiece could see that charge rise sevenfold, to around $70 on the trade.

Which will have the EU’s desired outcome.  Jiganti was caught by surprise by all of this:

To be honest, I thought that cooler heads would prevail.  I thought the US government would take care of it before it really became an issue.

For all of Treasury’s sharp words about the tax, though, don’t expect any real action.  President Barack Obama, Treasury’s boss, has never met a tax he didn’t like.  He’s not going to oppose this one in any meaningful way.