Tag Archives: taxes

Lies of my President, Part 4

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This is Part 4 of my series on the lies told by Democratic Presidential Candidate Barack Obama in the nearly four years in which he’s been in office.  As I said earlier, I’m not concerned with his broken campaign promises so much as I am with his dishonesty while in office.

Here’s this little episode, reported by James Taranto, where Obama lied to the Catholic church.  Here’s how then-Archbishop, now Cardinal Timothy Dolan described a conversation and its aftermath with Obama over HHS’ mandate that insurance providers provide coverage for contraceptives and abortifacients, even when that coverage contradicts the religious teachings of the provider:

I said [in summary of his conversation with Obama], “I’ve heard you say, first of all, that you have immense regard for the work of the Catholic Church in the United States in health care, education and charity….  I have heard you say that you are not going to let the administration do anything to impede that work and…that you take the protection of the rights of conscience with the utmost seriousness….  Does that accurately sum up our conversation?” [Mr. Obama] said, “You bet it does.”

The archbishop, says Taranto, asked for permission to relay the message to the other bishops. “You don’t have my permission, you’ve got my request,” the president replied.

“So you can imagine the chagrin,” Archbishop Dolan continues, “when he called me at the end of January to say that the mandates remain in place and that there would be no substantive change, and that the only thing that he could offer me was that we would have until August….  I said, ‘Mr. President, I appreciate the call.  Are you saying now that we have until August to introduce to you continual concerns that might trigger a substantive mitigation in these mandates?’  He said, ‘No, the mandates remain.  We’re more or less giving you this time to find out how you’re going to be able to comply.’ “

Then there’s this cynical distortion of President Ronald Reagan’s position on tax increases, as described by Steven Hayward in Commentary.  In arguing for his permanent tax increase on a group of Americans of whom he greatly disapproves, Obama cited this from Reagan:

Would you rather reduce deficits and interest rates by raising revenue from those who are not now paying their fair share, or would you rather accept larger budget deficits, higher interest rates, and higher unemployment? And I think I know your answer.

As Hayward pointed out, what Reagan was talking about was this: all the “tax increases” to which Reagan agreed were temporary excise hikes on cigarettes and telephone calls and technical changes in the tax code (such as the elimination of depreciation schedules and the reduction of tax credits and deductions).  Moreover, Reagan refused to accept any rollback or other alteration to the reduced tax rates he’d already fought so hard to win.  Even in the ensuing recession.  Especially in the ensuing recession.  But that’s OK, there’s nothing like a remark taken out of context and then distorted further by its present usage.

Lies of my President, Part 3

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This is Part 3 of my series on the lies told by Democratic Presidential Candidate Barack Obama in the nearly four years in which he’s been in office.  As I said earlier, I’m not concerned with his broken campaign promises so much as I am with his dishonesty while in office.

Last February, Obama had this to say through his Chief of Staff and former Budget Director, Jack Lew.  The remarks first came in response to a question from Dick Gregory, of MSNBC’s Meet the Press, and then in an interview with CNN’s Candy Crowley.

Gregory: Here’s a stat that a lot of people may not know, but it’s pretty striking.  The number of days since Senate Democrats passed a budget is 1,019.  Can you just explain as a former budget director, how do you fund the government when there’s no budget?

Lew: Well, you know, one of the things about the United States Senate that I think the American people have realized is that it takes 60, not 50 votes to pass something.  And there has been Republican opposition to anything that Senate Democrats have tried to do.

and

Crowley: I want to read for our viewers something that Sen Harry Reid, the Democrat Majority Leader in the US Senate, who said, “We do not need to bring a budget to the floor this year.  It’s done, we don’t need to do it.”

Lew: He’s not saying that they shouldn’t pass a budget.  But we also need to be honest.  You can’t pass a budget in the Senate of the United States without 60 votes and you can’t get 60 votes without bipartisan support.

It stretches credulity far beyond the breaking point for Obama—or his ex-budget director—not to know that it takes 51 votes to pass a budget resolution; budget resolutions cannot be filibustered, the point of the 60-vote red herring.  This is a lie, pure and simple.

On the Keystone XL pipeline, there’s this bit of dishonesty.  Recall that Obama killed the pipeline that would have run from Canadian oil sands into central and Gulf-coastal US because he felt “rushed” by Republicans.  Last March, he staged a photo-op to take credit for “expediting” the permit process for a southern portion of Keystone XL, a part that runs in Oklahoma.  And a part that doesn’t need his, or State’s, approval since it doesn’t cross an international border.

And this one:

If you’ve got health insurance, you like your doctors, you like your plan, you can keep your doctor, you can keep your plan. Nobody is talking about taking that away from you.

Never mind that more and more companies are limiting the health insurance coverage they’re offering as insurance costs rise (wait—weren’t these supposed to come down?).  Never mind that as health insurance coverage alters, doctors are increasingly opting out of—or being driven from by the insurance companies—accepting patients with this or that insurance company’s policy.  And never mind that Sears and Darden Restaurants are moving to a plan where they don’t offer health insurance coverage at all.  Instead, they’ll give their employees a sum of money and allow them to shop for their own coverage via an online exchange.

And this: Senator Barack Obama spoke against recess appointments, including signing a letter to President Bush the Younger objecting to a recess appointment.  He also insisted that it’s “the wrong thing to do,” to appoint people who “couldn’t get through a Senate nomination.”

As president, though, Obama has made “recess appointments” while deliberately bypassing any opportunity for the Senate to weigh in: Donald Berwick to Administrator of the Centers for Medicare and Medicaid Services after leaving the position vacant for 15 months before nominating any one at all, just because he didn’t want to hassle with Republicans; Professor Elizabeth Warren to a created just-for-the-purpose “special assistant” position in his office in order to make her the functional head of the new CFPB, when it became clear that she had no hope of being confirmed; three people to the NLRB while the Senate was still in session.

A Tax for a Health Fiscal Cliff

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It joins Democratic Presidential Candidate Barack Obama’s enormous tax hike he has taking place at the start of the new year, and it also creates a health cliff for the nearby future as it actively stifles medical innovation in the US.  “It” is the 2.3% tax that will be charged to American medical device manufacturers—on top line revenue—sales—not on profit.  Former Governor and US Senator from Indiana, Evan Bayh (D, IN), offered some thoughts on this problem in a recent Wall Street Journal op-ed.

As a result of this problem,

For a typical company, a 2.3% tax on revenues equals a 15% tax on profits.  When combined with a 35% corporate tax and state corporate taxes, the tax rate for the medical-device industry will exceed 50% in most jurisdictions.

[This inflicts an] added cost of $30 billion—according to the Congressional Budget Office—to the industry.  This tax comes straight out of a company’s bottom line.  Because many devices are sold to hospitals, physicians and other providers through multiyear contracts, the prices are already locked in, so the tax cannot be passed on to the buyer.

Think about the effects this will have on medical innovation.  Governor Bayh did:

America is a global leader in medical-device production and sales.  Last year the US device industry earned $5.4 billion more in exports than we spent on imports of such devices.

Even more important to the average American is the industry’s role in saving and sustaining life.  Medical devices have contributed to remarkable advances in numerous areas: artificial hips and knees, and devices used in the treatment of cancer, and for angioplasty, vascular surgery and in-vitro fertilization, to name a few.  Many of these devices have not only improved the quality of life for patients, but also produced health-care cost savings—for instance, each time an angioplastic balloon made open-heart surgery unnecessary.

and

Especially hard hit could be the hundreds of small companies developing medical software applications. These apps promise to revolutionize the practice of medicine—for instance, by delivering blood-sugar test results for diabetics.

But now

Thirty billion dollars must be taken out of operations or R&D.  Who knows what lifesaving devices that might have been developed will fall victim to this tax?

What about jobs?

Many US device companies, in response, have already announced layoffs, canceled plans for domestic expansion and slashed research-and-development budgets.  This month, Welch Allyn—a maker of stethoscopes and blood-pressure cuffs—announced that it will lay off 10% of its global workforce over the next three years, but all of the jobs being cut are in the US[]

and

In my state of Indiana alone, Cook Medical has canceled plans to build one new US facility annually in each of the next several years, and Zimmer plans to lay off 450 workers, while Hill-Rom expects to lay off 200.  Stryker, based in Michigan, anticipates having to lay off 1,000 workers[]

and

[P]roduction is moving overseas, good jobs are going to Europe and Asia, and cutting-edge medical devices will now be produced elsewhere for import into the US.

Of course Obama and his Progressive Congressmen knew this when they wrote the tax; it’s part of why the entire bill was written behind closed doors in the back of Harry Reid’s office suite, and why Nancy Pelosi was so anxious to get the bill passed before “we can find out what is in it.”  So much for Obama’s concern for the little guy.  So much for Obama’s concern for the health of Americans.  So much for Obama’s concern for America’s innovation leadership.

Update: added the actual name of the man in the first paragraph.

Switzerland Giving up Its Tax Haven Status?

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Spiegel International Online has an article that discusses the possibility of Switzerland giving up a major portion of its banking secrecy laws under political pressure from the US and Germany.  Although the purpose of the article is to discuss the degree of importance (or lack) of the Swiss’ status as a tax haven to the Swiss economy, the discussion raises another question, immediately germane to our own economic condition, about tax havens generally.

Should we care if Switzerland remains a tax haven or gives that up?  If our own tax code weren’t so Byzantine, with such high rates, and with so many excused from taxes altogether (whether from the aggregate of subsidies, credits, exemptions, pick-a-loophole, or just from belonging to a protected class), Americans would have no need of tax havens.

If privacy is our concern, still we should be looking here at home, and reining in an overreaching government.  Sort of the kind of thing elections are for.

A Social Security System Proposal

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Social Security, as we know it, is going to go broke in a few short years.  Demographics guarantee this.  When Social Security was instituted, it was a supplemental income program for our retired, who were expected to continue to rely on their own resources and those of their families for their retirement years.  Moreover, at that time, there were roughly 7 workers paying into the system for every retiree and a retiree lifespan in retirement was about 6 years.

Today, Social Security is expected to be an income replacement program.  Moreover, the number of workers paying into the system is around 3 for each retiree, and that number is falling.  Then, each retiree is expected to live for 17+ years in retirement.

But one thing has remained constant.  Each worker paying into the system is paying for someone else’s current retirement—the money paid in is not set aside to accumulate for the payer’s benefit.

I propose to change this in the following way.  It will eliminate Social Security as we know it, but it also will preserve and strengthen the promise of social security: a reasonably comfortable retirement for the retiree.  Privatize, entirely, Social Security.

Eliminate the payroll tax for both employer and employee (think about the immediate stimulative effect from reduction in the cost of labor of 6.2%).  However, require the employee to set aside 6.2% of his income from all sources, not just from wage income (just to keep it simple, and consistent with a tax proposal nearby).  Why 6.2%?  That’s the current employee payroll tax for Social Security, absent any temporary reduction.  Eliminate, also, the present upper limit on income (wages) subject to the Social Security payroll tax.  However, instead of this money immediately being paid out to someone else’s present retirement, it will be put into an account owned and managed by the employee, and the money will accumulate for his own future retirement.

Let’s look at the effect of this on a hypothetical man’s retirement.  Let’s say the man earned $100,000 per year in his last years of working.

Under the current system, that man retiring at 66 will receive $25,800 per year until 2033, when the Social Security Trust Fund will be exhausted and payroll taxes will only be able to support payouts at 75% of their nominal rate—our man, after having been retired just 20 or so years (never mind the 17+ years of an actuarial retirement), will see his payout cut to $19,400 per year (note that for this, I’m ignoring inflation and cost of living increases).

Now suppose our man has been socking away 6.2% for his, let us say, 40 years of working life, and he’s still making $100,000 in his last years.  Again, we’ll ignore inflation, and we’ll take a naïve position of his having started out making $20,000 per year and received constant annual pay raises to reach his present $100,000 annual income.  With his 6.2% set-aside each year naively left to grow with the market (the S&P500 historical growth rate has been 9.77% since 1926—a period including the Great Depression, the Carter Recession, and the Panic of 2008), our man will accumulate enough by the time of his retirement to withdraw over $55,000 per year over the course of a nominal 18-year retirement, or more than $29,000 per year, if he expects to have a 34-year retirement (i.e., live to 100).  And he won’t have a reduction to 75% of that because the government ran out of money.  Of course, this table napkin analysis ignores inflation, also, and it ignores leaving the remainder of the man’s accumulated retirement fund still invested—now perhaps in bonds.

Notice one other critical factor here: with privatized retirement savings in place of Social Security, each man will be working for his own future instead of working for someone else’s present.  With his own money at stake, the man will do a far more careful job of managing for his future retirement than the government already has done—with OPM.

There is, of course, the risk that the man may invest foolishly, or he may invest wisely but have a run of bad luck in the market—downturns do occur.  What happens to him in this brave new world?

First, look at what happens in the present situation, where the impending failure of the Social Security System is an empirical fact.  In this scenario, where the government’s management of our retirement accounts has failed, the disaster affects all of us—every retired individual; every soon-to-be-retired individual; and each of the rest of us, who must find a way to support these unfortunates.

If the man fails, though, whether through his folly or his bad luck, the effects of his failure is limited to him and his family; it is not a national disaster.  And these individuals will be few enough in number that help—a hand back up, generally, or support if his failure comes too late for him to recover—can come from his family, his local community, church and/or charity, and, yes, as a last resort, state government.