Saturday, October 31, 2009

Hillary Clinton Just Being Honest

During a recent visit to Pakistan, Secretary of State Hillary Clinton was apparently brutally honest with the Pakistanis. She complained about the Pakistani government's apparent lack of money. She had the following apparent recommendation.

"The percentage of taxes on GDP (in Pakistan) is among the lowest in the world. We (the United States) tax everything that moves and doesn’t move, and that’s not what we see in Pakistan."
And that's supposed to be encouragement?


Thursday, October 29, 2009

Cash for Clunkers in the Rear View Mirror

Now that "Cash for Clunkers" is thankfully in our rear-view mirror, perhaps it's time to evaluate the economic and historical impact of the program.

Let's see, auto analysts at Edmunds calculate that the government needlessly stimulated car sales that would have happened anyway. Estimated cost? About $24,000 (of borrowed money) per car.

Car sales figures show that yes, the Cash for Clunkers program TEMPORARILY stimulated the auto market, which then promptly fell back to previous sales levels once the the government "stimulus" ended.

So why was the government so eager to continue this bad economic policy, even printing more money to continue the program? Did they really believe it to be an effective stimulus measure? Was it because we, the Collective, now own General Motors (GM) and they expected to sell more GM cars? GM came in second overall behind Toyota. Japanese and Korean manufacturers benefited most.

Or, was it to pump the durable goods financial statistics so that the government can claim that the recession is over?

Wednesday, August 5, 2009

Senator Barbara Boxer, Comedic Genius

Few in the country realize the comedy genius of one of California's fine Senators. Of course, I speak of Senator (don't call her ma'am!) Boxer. She brings such levity to the hallowed halls of Congress. But then again, it might just be something leeching out of the old plumbing in the Capitol.

And some people still wonder why I worry about the state of our union. Folks, I think we have ourselves a new spokesmodel for good governance!

Let's all give it up for Senatoooor Barbaraaaaa Boooooxer (and the audience goes wild)!

Barbara Boxer and Appropriate Protest Attire

What? Smart, articulate, people with good grooming habits can't protest the government? Well, it must be a conspiracy I tell you!

Don't Call Me Ma'am!

Sorry Senator Boxer, I don't think the general meant any disrespect but you know those whacky brigadier generals! Generally, people in the military address people with superior authority as "sir" or "ma'am."

It's Only Racist If Someone Else Does It

The interesting bits start about a minute into it. Harry Alford, CEO of the Black Chamber of Commerce, is testifying regarding green jobs. Let's see Senator Boxer's witty retort. Maybe it's because he called her "ma'am." Makes us all proud, doesn't it.

How long 'til 2010? Democrats, really, you don't have anybody else that can run?

See also ...

Barbara Boxer Performs "Daily Show" Reenactment

Tuesday, August 4, 2009

An Honest Health Care Debate?: Are We Really THIS #*&@ Stupid?

Like many Americans, yes, I'm interested in real, sensible, practical health-care reform--you know, the type that makes sense, reduces costs, and improves care. However, I just have to shake my head when I see the blatant manipulation (they're not technically lies) coming from our so-called "leaders" in Washington.

Here's a little snippet that caught my eye about a month ago in a Washington Post article:

"In the stage-managed event, questions for Obama came from a live audience selected by the White House and the college, and from Internet questions chosen by the administration's new-media team. Of the seven questions the president answered, four were selected by his staff from videos submitted to the White House Web site or from those responding to a request for 'tweets.'

"The president called randomly on three audience members. All turned out to be members of groups with close ties to his administration: the Service Employees International Union, Health Care for America Now, and Organizing for America, which is a part of the Democratic National Committee. White House officials said that was a coincidence."

If this really was "a coincidence," I would suggest that the President buy himself a lottery ticket! His luck is truly phenomenal!

The Serivce Employees International Union (SEIU)? I've heard of them. As reported in the L.A. Times and the Chicago Tribune, didn't the SEIU spend $60 million to elect the President and now have unprecedented access to the White House? The SEIU is also #9 on the list of the largest political contributors to some of our lofty, ethical elected officials (97% from only one political party--you guess which).

I'm not familiar with Health Care for America Now. That sounds like a non-partisan group interested in prudent health-care reforms, right? Let's see what I can find out about them from their web site.

Hmm, well let's see. There's ACORN, the AFL-CIO (#31 on the top politcal donors list), American Federation of State, County and Municipal Employees (#2 on the list), Americans United for Change (hey, isn't their former president, Brad Woodhouse, now the communications director for the Democratic National Commitee (DNC)?). Wow, and I haven't even made it out of the 'A's yet.

Again, I wasn't familiar with the name Organizing for America until I again searched the web. Oh yeah, this was the organization that then-candidate Obama formed when he was seeking the White House. The site helped organize his campaign in different states, mobilize his volunteers, and they maintain huge E-mail list. I scroll down the page. Wait a second, is this site managed by the DNC--the same DNC where Brad Woodhouse now works but used to be with Americans United for Change? Wow, another stunning "coincidence"!

And people thought Richard Nixon was tricky. Apparently President Obama excelled in his previous role as a "community organizer." These groups are well coordinated from the top, but they are also more inbred than some crazy dog breeds.

This so-called "national debate on health care" is a complete SHAM. This is a complete SHAME!!!

Sunday, August 2, 2009

All Clunkers Are Not Created Equally

Apparently unlike most Americans, I am usually uncomfortable taking supposedly "free money" from the government. However, as the owner of an eleven-year old minivan and a fourteen-year old four-door sedan, I put aside my prohibitions in favor of the "free" $4,500. After all, I and my children will be paying for it anyway via taxes plus interest on all that debt.

But image my surprise that my "clunkers" are not gas-guzzly enough to qualify (wow, Congress actually put a limitation on a government give-away program?). Unfortunately for me, I stupidly made prudent, common-sense choices in automobiles and was concerned about good gas mileage even back at $1.40 a gallon. Back then, I had the money to purchase something much grander but stupidly chose not to and instead save the money. Many of my smarter friends had it right, though. They purchased massive, luxurious, heavy, gas-guzzling SUV land-yachts and took full advantage of the IRS tax incentives encouraging larger vehicles. They’re written off many thousands of dollars since then and will now likely receive another $4,500 toward the purchase of a new car courtesy of the federal government. Huh? Congress first incentivizes bad behavior and then later rewards such behavior. And people wonder why I worry when Congress attempts to influence markets.

Fortunately, a few brave souls in Congress attempted to close the ridiculous SUV tax loophole with HR 5579 back in 2006, which died in committee of course. Good luck now that the government owns G.M. SUVs are a highly-profitable segment of the market and the auto union, owners of many in Congress, is a major shareholder.

United Auto Workers (UAW)#16 on the All-Time Top Political Donors to Congress

Top Recipients of UAW Donations
(Image that! The top recipient also helped the UAW negotiate a better position ahead of other creditors during the government purchase of G.M.)

Friday, July 31, 2009

Celebrate America!

After the non-stop deluge of the Congressional waterboarding of America (TARP, stimulus, cap-and-trade, health care, and a few trillion dollars later), it's time to sit back and enjoy a few weeks of long-needed rest. Let's hope that Congress takes a long, long vacation.

The Oppressive Progressive Income Tax: California Edition

I thought I would share a few charts on California’s Personal Income Tax (or PIT for short). I haven’t had time to analyze the federal IRS data yet. California’s PIT is more heavily progressive than the federal income tax and California relies on PIT for a greater share of total revenues (nearly 50% in 2006). California treats all income equally. Unlike the federal government, California taxes capital gains at the ordinary income level. Most of the taxes collected at the upper end are from stock and real-estate gains which have been devastated by the simultaneous downturns in both areas (hence the California budget disaster).

Recently, many in California pointed to the 2/3rds majority tax approval requirement as a stumbling block to patching the state government’s massive spending crater. Some argued that California needs to impose higher taxes on the rich because “we all know that the rich don’t pay their fair share.” These charts were meant to analyze these arguments.

The following charts use data freely available for download from California’s Franchise Tax Board (FTB, or California’s IRS).

I then sorted the percent of PIT taxes paid by population. I think that the chart speaks for itself, showing that the state’s need for revenues falls on a small minority of (i.e., electorally insignificant) taxpayers.

If distributed equally, the “average” state tax bill would be $3,100. By population, 85% of taxpayers paid below the average while just 15% paid above the average. Amazingly, half of the entire PIT tax bill is paid by just 2% of taxpayers. The other 98% of taxpayers pay the other half. The 2/3 majority requirement is the ONLY real check against runaway spending, and admittedly not a very good one.

Back to the 2/3rds discussion for a second. The majority of Californian’s already pay less than the “average”, even at the 66.7% population level. In fact, that electorally-strong 2/3rds contributed just 6% to the entire PIT tax bill. The electorally-weak 1/3 contributed the other 94%. Remember the 2% that pays 50% of the PIT bill? Well, because PIT is half of California’s revenues, those 2% provided a full quarter of the entire state’s revenues (thank you, my beloved fellow Californian). That 2% of taxpayers equates to a city the size of Riverside, CA or about 280,000 people. Remember, the state’s entire population is roughly 37 million, so we’re talking less that 0.8% of the entire population. But this is fair, right (he writes with fingers dripped in sarcasm)?

Let's look at it another way. Would you agree that all California residents benefit from state government? Do all state residents benefit equally? Sure, some argue that the rich benefit more because they have more to lose while others point to the costs of welfare and social programs at the low end. So let's look at the effective cost of state government by population. This following chart shows the effective cost of $1 of state government. Those taxpayers that pay below the “average” cost pay less than $1, those that pay above the average pay more. We won’t even discuss the estimated 7%-8% of the population that is here illegally and likely pays nothing in PIT.

Two-thirds of Californians effectively pay only 25 cents on each $1 of state service that they receive. A full half of taxpayers pay less than 12 cents. The remainder of that cost is subsidized by those at the upper end. High wage earners (we should all be so luck), effectively pay over $500 for every $1 of service.

Here is where the conflict emerges. We have two different systems when voting on spending and tax-related measures.

On one side, we have "one person, one vote". Many who vote in favor of more spending will never have to pay for the consequence of their vote.

On the other side, we have the progressive income tax system where top income earners pay more for government programs, despite having just one vote.

Politicians love to promise new spending to win votes and guarantee re-election. Voters love new services for which they do not have to pay. The progressive income tax system gives both the politicians and voters what they want without any pesky checks and balances.

Let's use an illustrative example. Say that, in order to ensure re-election, the dominant political party decides that every Californian MUST have a 50-inch HDTV on which to watch (and snicker at) the Governor's latest action flick. Due to State's buying power, the State can buy these TVs for $1,000. Just vote "Yes" on the ballot proposition and you too can have one of the beauties. The cost will be painlessly applied to your annual Personal Income Tax bill.

If you are in the bottom two-thirds of the taxpayer population, you pay just 25 cents or less on the dollar. Effectively, you are insulated from the true cost of operating the state government. This means that the $1,000 TV costs you $250 or less. If you are in the bottom 30%, the cost is only $100 or less because you effectively pay 1 cent on the dollar or less. So which way are you going to vote? I'd guess YES.

Now, let's say that you happen to be in the top 15% of taxpayers. Due to the progressive income tax, this means that you effectively pay more than $1 for every $1 of service. "That's fair," you say, "because they earn more money." Okay, let's look at the top-most 2% of taxpayers, you know, the ones that pay 50% of the entire bill. These "lucky" citizens effectively pay $4.75 and much, much more for every $1 of government service. That $1,000 TV effectively costs a minimum of $4,750 to these taxpayers. For the very top taxpayers, the bill comes to an amazing $507,000! All this, despite that these taxpayers likely already have two better-quality TVs at home. If you are in this category, I'd guess that you would vote NO. Unfortunately for you, you are electorally insignificant. It REALLY DOES NOT MATTER if you think this is a good idea or not but you WILL have to PAY FOR IT.

At the ballot box, the top 15% of taxpayers can NEVER prevail in a free and fair democratic election against the majority for popular programs. Want a low-cost 50-inch HDTV? Vote "YES" and make somebody else pay for. Want free higher education? Vote "YES" and make somebody else pay for it. Want free medical care? Vote "YES" and make somebody else pay for it.

The politicians that use these techniques appeal to the broad masses, ensuring re-election. There are no checks and balances against such abuses. While I have not found "smoking gun" evidence, it does offer an explanation for California’s constant overspending (above inflation and population growth), the lack of fiscal discipline, and the domination of one party in the California Legislature.

There is also a separate debate as to whether the excess tax money better serves society when in the hands of government, or left in the pockets of those that earned it. By California’s example, even a spoiled rich heiress might make better spending decisions.