Category Archives: markets

A Tax Reform Idea

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Close, but no cigar.  Here are some ideas that are being kicked around.

…the president is pushing for tax incentives for making products, especially high-tech ones, in the US.  He also wants more focused federal research programs, including funds for new privately run institutes to study advanced manufacturing techniques.

Senator Debbie Stabenow (D, MI):

…legislation that would give tax breaks to help companies cover the cost of moving production back to the US and ban tax deductions for the expenses of moving operations abroad.

Congressman David Cicilline (D, RI):

…federal grants to help companies upgrade equipment and retrain workers.

Republican Presidential Candidate Mitt Romney has these:

…repealing “excessive” regulation in such areas as environmental protection.  He also wants to require secret ballots for union-certification votes, which might make it harder for organized labor to win.”

The Democrats want Big Government solutions—that are careful to keep government’s hands in business’ pockets—and solutions that simply make an already excessively convoluted tax code even more so.  Romney’s ideas don’t even address the tax question; although they would help business.

No.  Instead of that claptrap, simplify and reduce.

Get rid of the tax subsidies.  Get rid of the tax credits.  Get rid of business regulations that do not actively support productivity improvement or enforce contract law—contracts between businesses and suppliers, businesses and customers, business management and business employees.

Lower—if not eliminate—tax rates on businesses.  They’re not the ones paying the taxes, anyway; their customers pay them in the form of higher prices, so that a tax on business is simply a second tax on private American citizens.  Including those 50% who pay little to no income tax of their own; including seniors who have only a fixed income with which to pay for their necessities.

Extremes

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Democratic Presidential Candidate Barack Obama gave an interview to the AP in which he described Republican Presidential Candidate Mitt Romney’s positions as “extreme.”  Yet both Obama’s descriptions and his countervailing positions demonstrate pretty conclusively which of the two is extreme.

Obama had this non sequitur in his remarks about what he has “learned about [Romney] this campaign:

What we’ve also seen is Gov. Romney has not been willing to, I think, own up to some of the responsibilities that are required if you’re president of the United States. So there’s been obviously a lot of discussion about his unwillingness to release his tax returns.

Apparently honoring the law (here, concerning the required releasability of personal tax returns) is “not willing to own up to some of the responsibilities that are required if you’re president of the United States.”  But ignoring the law (vis., DOMA) is such a responsibility.  Ignoring the will of the Congress and implementing carbon cap-and-trade by Executive fiat is such a responsibility.  Ignoring the will of the Congress (the failed DREAM ACT) and implementing immigration parameters by Executive fiat is such a responsibility.  Refusing to enforce our borders while attacking states that do attempt to enforce them, using laws that ape Federal law, is such a responsibility.

Obama made this argument about Romney being short on facts in his campaign.

[T]he most prominent argument that he’s been making for why voters should vote for him is this notion that Obama took the work requirement out of welfare, and he’ll put it back.

Never mind that the explicit requirement for actual work has been withdrawn, and the states’ “flexibility” includes the option to not require work or work training.

And without a trace of irony, Obama had this to say:

Well, I think that if you don’t have a good argument for how you’re going to make things better, then you stay focused on how you can discredit the incumbent.

After accusing Romney of being responsible for the cancer death of a woman (he did say in a separate interview that he didn’t really believe that, but in that same interview, he refused to repudiate the ad that made the accusation, or to call out the SuperPAC (run by his ex-Deputy Press Secretary) for having run it).  And after accusing Romney of being a felon over Romney’s position at Bain while rescuing the Olympics—stemming from Obama’s own “misunderstanding” of SEC filings.

On those extreme positions themselves, Obama had this:

[Romney] has signed up for positions, extreme positions that are very consistent with positions that a number of House Republicans have taken.

Obama then listed the Republicans’ $5 trillion tax cut proposal, the elimination of tax credits for wind energy, and an amorphous objection to the Republicans’ Medicare proposals as those “extreme” positions.

If I understand Obama aright, then, it’s extreme to cut taxes, especially in a recession: it’s extreme to leave more of private citizens’ money in the hands of the original private citizens instead of those of whom Obama favors.

It’s extreme, in a time of enormous government spending and debt buildup, to cut spending—especially to fringe energy sources like wind power.  Obama proudly pointed out that he’s doubled the output of wind-generated electricity with his tax credits.  Let’s see: total electricity generated in the US in 2008 was nearly 3.5 Terawatts.  Wind-generated electricity in 2011 was nearly 47 Megawatts.  Obama has pushed wind energy from nearly nothing to twice nearly nothing.  And that doubling came, as he so proudly said, only with the aid of government subsidy.  Wind-generated electricity is fringe not because it’s an idiotic idea, but because it cannot compete in the free market on its own; it needs a constant propping up.

Finally, it’s extreme to take steps to reform Medicare so as to preserve it for tomorrow’s seniors, while leaving it alone for today’s seniors and near-seniors (who have no chance of adjusting to any changes).

But what are Obama’s plans?  He’s carefully nebulous about those, but we can look to his record and see his plans.

Obama intends to ratchet up the taxes on Americans of whom he disapproves.  He intends to ratchet up his spendinginvesting in his favored companies and in his favored unions.  He already has taken the (not at all extreme, he says) measure of removing $700 billion from the present form of Medicare in putting it into his Obamacare to pay for that.

Who’s extreme?

“Ryan Budget” in a Nutshell

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Here’s a summary of the budget that the Progressives have begun demagoguing the moment Congressman Paul Ryan (R, WI) was asked to run for Vice President.

  • The latest full-scale version of the plan, unveiled in March, vows to cut spending by $5 trillion over the next decade, compared against President Obama’s plan.
  • The plan would, a decade from now, give seniors the option of taking a government payment to purchase health insurance. That payment could be used to buy a private insurance plan, or go toward the traditional Medicare plan. The plan calls for extra assistance to help low-income beneficiaries and those with “greater health risks.”
  • The plan would overhaul Medicaid by turning it into a block grant system for states.
  • The plan would cut the corporate tax rate from 35 percent to 25 percent. It would implement two individual income tax brackets — 10 percent and 25 percent.
  • The plan would head off the scheduled automatic defense cuts, first by diverting the planned $55 million defense cut in 2013 by implementing those cuts elsewhere.
  • The plan vows to bring the size of government to 20 percent of GDP by 2015.

Of what are the Progressives so terrified in this budget?  Ryan put his finger on it two years ago in the summary paragraph of his Wall Street Journal op-ed, reprinted by the WSJ over the weekend:

The contrast with our budget couldn’t be clearer: We put our trust in citizens, not government.  Our budget returns power to individuals, families and communities.  It draws inspiration from the Founders’ belief that all people are born with an unalienable right to the pursuit of happiness. Protecting this right means trusting citizens, not nameless government officials, to decide what is in their best interests and make the right choice about our nation’s future.

With the people in charge, Progressives won’t have anything to do.

What a Central Bank Does vs What the European Central Bank is Doing

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…and to too great an extent, what the Fed is doing….

As Spiegel Online International reports, the ECB intends to attempt to buy up southern Europe’s sovereign debt instruments on an enormous scale.  The idea is to get those, I’ll call them, toxic assets off the market so that lending can resume and the euro zone’s (and EU’s) market economies can restart.

There are a couple of fundamental problems with this scheme (and I use that term in the American sense).  I’ll elide, in this post, the clumsiness of it: it doesn’t satisfy central bank statutes, and the ECB risks becoming a secondary government while simultaneously losing its independence to national politicians.

One problem is the enormous risk this entails—not just for the ECB, but for the EU member nations that fund the ECB and so are on the hook for its failures.  That is to say, the taxpaying citizens of those nations are on the hook.  The risk is whether the bailed out nations will benefit and recover their economies.  If they do not, the losses will become astronomic: the Spanish and Italian debts alone sum to nearly €3 trillion.

Another problem is that this sort of scheme, even if carried out without those…inefficiencies…does not work.  For instance, the euro zone finance ministers, in their latest bailout round, approved a €100 billion to rescue the Spanish banks.  However, the benefits only lasted until those €100 billion ran out; then yields—the prices borrowers must pay in order to get others to lend—on Spanish and Italian government bonds went back up to dangerous levels.

Some understand this: Jürgen Stark, a former member of the ECB Executive Board, has already said

The ECB has a clear mandate to guarantee price stability.  Every additional responsibility compromises this core function.

Notice that: the purpose of the ECB—of any central bank—is to maintain price stability.  The legitimate purpose doesn’t even include maintaining full employment, as the Fed attempts to do.  (In a free market, unfettered by government interferences beyond such niceties as enforcing contract law and laws against things like lying or cheating, price stability combined with freedom in the market tend to maintain full employment through market forces.)

Price stability—monetary policy—for the EU, and for the euro zone in particular, is the über-framework, within which the various nations can structure their individual market economies as they see fit: against a backdrop of price stability.

Interferingintervening in the markets—monetary policy—is the job of elected governments, not that of central banks.

The ECB needs to stay out of the market for sovereign debt.

What’s Their Plan?

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What is Democratic Party’s plan, exactly, for getting our country out of its debt hole, out of its economic hole that’s deepening that debt hole and ruining individual American lives?  What is Barack Obama’s plan?

Republican Presidential Candidate Mitt Romney and his supporters out-raised Democratic Presidential Candidate Barack Obama and his supporters last month by $100 million to $75 million, marking the third straight month the Republican candidate has out-raised the Democratic candidate.

In response, the Democratic Congressional Campaign Committee sent out the following, more in support of the Democratic Presidential candidate than any Democratic Congressional candidate:

BREAKING NEWS: Mitt Romney and the Republicans brought in a whopping $101 million in July.

You and I both know that Mitt Romney will sell America out if he becomes President — giving more tax breaks to his Big Oil and billionaire backers.

The only way we can stop them is to close this fundraising gap – starting today.

Please do your part — make a donation of $3 or more right now to back up President Obama with a Democratic majority.

The reality is simple: If Mitt can bury us under a wave of corporate special interest cash, we will lose in November.

But if everyone who’s been waiting to give pitches in a few dollars, we can start closing the gap today.

http://dccc.org/Close-The-Gap

Thanks for all you do,

Robby

Robby Mook
DCCC Executive Director

Well.  I guess, being a poor, dumb conservative, I just don’t understand.  What was that Democratic Party plan, again?