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October 31, 2008

Most Progressive Tax System? It's The U.S.

Far too many liberals and others on the left enjoy whining about the need to increase taxes on “the rich” and to increase the progressivity of the income tax. Not so quick. Scott Hodge, president of the Tax Foundation, writes at their Tax Policy Blog:

“a new study on inequality by researchers at the Organization for Economic Cooperation and Development (OECD) in Paris reveals that when it comes to household taxes (income taxes and employee social security contributions) the U.S. ‘has the most progressive tax system and collects the largest share of taxes from the richest 10% of the population.’” (emphasis added)

The OECD currently has 30 members, including Australia, Austria, and Belgium as well as Sweden, Switzerland, Turkey, United Kingdom, and  the United States; there are also plans to increase membership. Hodge then goes on to point out:

“As Column 1 in the table below shows, the U.S. tax system is far more progressive—meaning pro-poor—than similar systems in countries most Americans identify with high taxes, such as France and Sweden.

“Even after accounting for the fact that the top 10 percent of households in the U.S. have one of the highest shares of market income among OECD nations, our tax system is second only to Ireland in terms of its progressivity for households.

“The table also shows that the U.S. collects more household tax revenue from the top 10 percent of households than any other country and extracts the most from that income group relative to their share of the nation's income.

“Of course, these measures do not include the litany of other taxes households pay in each country, such as Value Added Taxes, corporate income taxes and excise taxes, but they do give a good indication that our system places a heavier tax burden on high-income households than other industrialized countries.”

To see just how progressive the U.S. tax system is, take a look at the table, which Hodge references. So just what is presidential aspirant Sen. Obama (D) talking about when he talks about “restoring fairness to our tax code?” And if the tax code is made more progressive, what effect will that have on the U.S. economy?

October 30, 2008

How Candidates’ Tax Plans’ Affect Joe The Plumber

We last growled about Joe the Plumber on October 19, talking about how the tax plan of  presidential aspirant Sen. Barack Obama (D) would affect the American Dream not only of Joe the Plumber but many other small business owners in America. In Fiscal Fact No. 152, published last week by the Tax Foundation, they point out, “An often under-appreciated feature of the U.S. tax system is that most small businesses are not required to pay the corporate income tax. Instead, small business income "flows through" to the owners who report it on their individual income tax returns and pay taxes due.” Robert Carroll, the publication’s author, begins his analysis:

“The Presidential candidates' tax plans would take the country in two very different directions. One aspect of their plans is how they would affect the entrepreneurial sector. This sector, which tends to be comprised of small businesses, is particularly important to the U.S. economy. It is an important source of innovation and risk-taking, it creates between 60 and 80 percent of net new jobs, it employs over half the labor force, and it generates more than one half of the nation's gross domestic product (GDP). (emphasis added).

“Entrepreneurs and small business invent new products, try out new technologies and experiment with new internal forms of organization. Others often follow their example, leading to increases in productivity, or learn from their mistakes and failures. By one count, patents by small firms were cited in subsequent patent applications 28 percent more frequently than those held by larger firms.

“The entrepreneurial sector in the United States is proportionately larger than in the private sector economies of its major trading partners. This advantage allows new ideas in the U.S. to be developed and tested more rapidly in the marketplace and adds to the innovation and the dynamism of the U.S. economy.”

Carroll then points out:

“According to the U.S. Department of the Treasury, taxpayers in the highest two tax brackets made up 8 percent of all taxpayers receiving small business income, but they received over 70 percent of such income and paid over 80 percent of the taxes on this income.[1] Also, roughly 50 percent of the revenue raised from rolling back the reduction in the top two tax rates enacted in 2001 and 2003 can be attributed directly to flow-through income.

“Also, there is abundant research showing that high tax rates can affect flow-through businesses and entrepreneurs in a number of damaging ways. Taxes have been found to affect the attractiveness of entrepreneurship as compared to working for someone else. A trio of papers by Carroll et al. (1999, 2000 and 2001) found taxes to slow the rate at which entrepreneurs expand operations and to discourage hiring and investment.

“In particular, this research found that reducing the tax rate from 39.6 percent to 33.2 percent increased the likelihood of hiring increases by 12 percent, and for those employees, increased median wages 3.2 percent. The research also found that high-income tax rates reduce the investment spending of entrepreneurs and the likelihood that they invest at all."

Do you want to risk the U.S. economy to Sen. Obama and his plan to tax Joe the Plumber and the other small businesses that drive the American economy? From his tax plan, I'm not sure he could pass economics 101.

For more information, see the Tax Foundation’s Presidential Candidate Tax Plan Comparison.

UPDATE (10/30/08). Add Tito the Builder to the name of Joe the Plumber whose American Dream would likely be demolished by Sen. Obama's tax plan, according to this post at Gateway Pundit.

October 29, 2008

The Founding Fathers On Redistribution

Thanks to Steve Gilbert at the Sweetness & Light blog for putting together a wonderful collection of seven quotes on what the nation’s Founding Fathers had to say about income redistribution, including these three:

“The moment the idea is admitted into society that property is not as sacred as the laws of God, and that there is not a force of law and public justice to protect it, anarchy and tyranny commence. If ‘Thou shalt not covet’ and ‘Thou shalt not steal’ were not commandments of Heaven, they must be made inviolable precepts in every society before it can be civilized or made free.”

— John Adams, A Defense of the Constitutions of Government of the United States of America, 1787

“To take from one, because it is thought his own industry and that of his fathers has acquired too much, in order to spare to others, who, or whose fathers, have not exercised equal industry and skill, is to violate arbitrarily the first principle of association, the guarantee to everyone the free exercise of his industry and the fruits acquired by it.”

— Thomas Jefferson, letter to Joseph Milligan, April 6, 1816

“[T]he government of the United States is a definite government, confined to specified objects. It is not like the state governments, whose powers are more general. Charity is no part of the legislative duty of the government.”

— James Madison

As Steve Gilbert quips, “But maybe they were wrong and Mr. Obama is right. After all, he is a Constitutional scholar.”

But what if Sen. Obama  is wrong? Are you willing to risk overturning 232 years of American history in favor of Sen. Obama’s vision for the country?

HT to The Astute Bloggers.

October 28, 2008

Where Is He Going To Get $4.3 Trillion?

We’ve growled several times recently, including October 26, October 21, October 19, and October 17 about the “tax cuts” promised by presidential aspirant Sen. Barack Obama (D). Alan Reynolds finds more troubling aspects, writing last Friday in the Wall Street Journal (available at the Cato Institute’s website):

“The most troublesome tax increases in Barack Obama's plan are not those we can already see but those sure to be announced later, after the election is over and budget realities rear their ugly head.

“The new president, whoever he is, will start out facing a budget deficit of at least $1 trillion, possibly much more. Sen. Obama has nonetheless promised to devote another $1.32 trillion over the next 10 years to several new or expanded refundable tax credits and a special exemption for seniors, according to the Urban Institute and Brookings Institution's Tax Policy Center (TPC). He calls this a "middle-class tax cut," while suggesting the middle class includes 95% of those who work.

“Mr. Obama's proposed income-based health-insurance subsidies, tax credits for tiny businesses, and expanded Medicaid eligibility would cost another $1.63 trillion, according to the TPC. Thus his tax rebates and health insurance subsidies alone would lift the undisclosed bill to future taxpayers by $2.95 trillion -- roughly $295 billion a year by 2012.

“But that's not all . . . Altogether, Mr. Obama is promising at least $4.3 trillion of increased spending and reduced tax revenue from 2009 to 2018 -- roughly an extra $430 billion a year by 2012-2013.”

It’s necessary to read the entire article to appreciate all the facts introduced and a complete understanding of how bad things could become, but Mr. Reynolds closes by writing:

“Mr. Obama has offered no clue as to how he intends to pay for his health-insurance plans, or doubling foreign aid, or any of the other 175 programs he's promised to expand. Although he may hope to collect an even larger share of loot from the top of the heap, the harsh reality is that this Democrat's quest for hundreds of billions more revenue each year would have to reach deep into the pockets of the people much lower on the economic ladder. Even then he'd come up short.”

October 27, 2008

Pigs Don’t Fly: Advice for Voters!

With the 2008 elections coming up next week, the following advice seems especially appropriate:

"Politicians are just like the rest of us. They find it hard to do the right thing. They claim to have principles, but when their principles clash with what is expedient, they often find a way to justify their self-interest. If they sacrifice what is noble or ideal for personal gain, they are sure to explain that it was all for the children, or the environment or at least for the good of society.

“Pigs don't fly. Politicians, being mere mortals like the rest of us, respond to incentives. They're a mixture of selfless and selfish and when the incentives push them to do the wrong thing, albeit the self-interested one, why should we ever be surprised? Why should (we) be fooled by their professions of principle, their claims of devotion to the public interest?”

-- Russell Roberts

Mr. Roberts is “is a professor of economics at George Mason University and a research fellow at Stanford University's Hoover Institution. He is the Features Editor of the Library of Economics and Liberty and the host of EconTalk.” The quote is taken from this essay at the Library of Economics and Liberty, which “is part of Ten Key Ideas, an occasional series on fundamental economic concepts.” He also blogs at Cafe Hayek.

October 26, 2008

Making A Mess Of ‘Fairness’

In an op-ed last week in the Wall Street Journal, Adam Lerrick, a professor of economics at Carnegie Mellon University, asks whether taxpayers can be pushed too far. He begins his piece by saying:

“What happens when the voter in the exact middle of the earnings spectrum receives more in benefits from Washington than he pays in taxes? Economists Allan Meltzer and Scott Richard posed this question 27 years ago. We may soon enough know the answer.

“Barack Obama is offering voters strong incentives to support higher taxes and bigger government. This could be the magic income-redistribution formula Democrats have long sought.

“Sen. Obama is promising $500 and $1,000 gift-wrapped packets of money in the form of refundable tax credits. These will shift the tax demographics to the tipping point where half of all voters will receive a cash windfall from Washington and an overwhelming majority will gain from tax hikes and more government spending.” (emphasis added)

He points out, however, the plunder from the ‘very rich’ will not be enough, and the incomes from those “who applaud the ‘fairness’ of their candidate’s tax plans” will be targeted in due course. What next? Lerrick writes:

“Other nations have tried the ideology of fairness in the place of incentives and found that reward without work is a recipe for decline. In the late 1970s and throughout the 1980s, Margaret Thatcher took on the unions and slashed taxes to restore growth and jobs in Great Britain. In Germany a few years ago, Social Democrat Gerhard Schroeder defied his party's dogma and loosened labor's grip on the economy to end stagnation. And more recently in France, Nicolas Sarkozy was swept to power on a platform of restoring flexibility to the economy.

“The sequence is always the same. High-tax, big-spending policies force the economy to lose momentum. Then growth in government spending outstrips revenues. Fiscal and trade deficits soar. Public debt, excessive taxation and unemployment follow. The central bank tries to solve the problem by printing money. International competitiveness is lost and the currency depreciates. The system stagnates. And then a frightened electorate returns conservatives to power.”

In conclusion, Lerrick says:

“The economic tides will not stand still while Washington experiments with European-type social democracy . . . (and) Tomorrow’s children may come to question why their parents sold their birthright for a mess of ‘fairness’ . . . and American opportunity is no longer the envy of the world.” (emphasis added)

To repeat the Thomas Sowell quote from our October 10 growls, "One of the sad signs of our times is that we have demonized those who produce, subsidized those who refuse to produce, and canonized those who complain." And see the growls from earlier this month about Sen. Obama's so-called "tax cuts," including Otober 21, 19, and 17. Click-on "October" under "Archives" in the right-hand column.

October 25, 2008

How Uncle Sam Stocks The Potomac

"As long as Uncle Sam continues to stock the Potomac by ripping from the body politic such enormous quantities of flesh and muscle - now more than three trillion dollars worth annually - sharks and vultures will inevitably swarm throughout Washington in a competitive struggle to gorge themselves on this unfortunate feast."

-- Donald J. Boudreaux, Chairman, Economics Department, George Mason University

HT: Cafe Hayek

 

October 24, 2008

Plans To Seize Your Private Pension Plan?

James Pethokoukis writes on his “Capital Commerce” blog at U.S. News & World Report yesterday there may be Democrats in the U.S. House of Representatives who “might try something . . . loopy: kill 401(k) plans.” (emphasis added) He explains:

“House Democrats recently invited Teresa Ghilarducci, a professor at the New School of Social Research, to testify before a subcommittee on her idea to eliminate the preferential tax treatment of the popular retirement plans. In place of 401(k) plans, she would have workers transfer their dough into government-created "guaranteed retirement accounts" for every worker. The government would deposit $600 (inflation indexed) every year into the GRAs. Each worker would also have to save 5 percent of pay into the accounts, to which the government would pay a measly 3 percent return. Rep. Jim McDermott, a Democrat from Washington and chairman of the House Ways and Means Committee's Subcommittee on Income Security and Family Support, said that since "the savings rate isn't going up for the investment of $80 billion [in 401(k) tax breaks], we have to start to think about whether or not we want to continue to invest that $80 billion for a policy that's not generating what we now say it should."

Pethokoukis’s bottom line:

“My bottom line: If you believe in the long-run dynamism of the American economy, then you have to believe in the stock market. Listen to superinvestor Buffett, not the prof from the New School.”

Bret Jacobsen, founder and president of a research and communications firm, writes in his op-ed in yesterday’s DC Examiner:

“All working Americans should be concerned about retirement proceedings under the watch of House Education and Labor Committee chairman Rep. George Miller, D-CA. According to recent reports, Miller and other Democrats are considering portions of a plan that would take away nearly $80 billion in tax incentives for 401(k) plans.

“It’s possible the policy would force workers to pay an additional five percent of their paychecks into government-controlled accounts, from which they would earn only a three percent return. In other words, proponents of private Social Security accounts would see their grandest dreams, and worst nightmares, realized in one fell swoop.

“Democratic leaders and their labor allies can kill two birds with one stone. First, they will effectively neuter private, defined-contribution plans, which have replaced union-controlled defined-benefit pension plans for millions of Americans (after all, why would workers lock money away if there were no tax incentive?). At the same time, they can force those resources into a bigger, bloated government bureaucracy.”

Think carefully, very carefully, before you cast your vote on Tuesday, November 4!

October 23, 2008

Government Bureaucrat Is October’s Porker

Citizens Against Government Waste named their October Porker of the Month today, and he is FCC chairman Kevin Martin “for using FCC funds to sponsor a NASCAR driver from his home state.” Here are the details from the CAGW press release:

“The FCC will pay $355,000 to sponsor David Gilliland’s number 38 car, owned by Yates Racing, for three races, in order to raise awareness about the upcoming switch to digital television (DTV) in February.  Even though the commission has inundated networks with paid announcements for months, Martin considered it necessary to use additional taxpayer dollars to pay for the car and driver to bear slogans such as “Is Your TV ready for Digital?”

“While spreading public awareness over the transition from analog to digital broadcasting is important, the National Association of Broadcasters has stated that the public is already largely aware of the switch.  “This doesn't seem like the most efficient use of resources,” admitted FCC Commissioner Jonathan Adelstein.  While NASCAR is the biggest spectator sport in the country, it seems absurd to spend taxpayer money for three races only four months before the switch, following months of alternative advertising.  Chairman Martin not only chose to misuse government funds, but did so without consulting all of the FCC commissioners.

“Not only does this expenditure show poor judgment, the underlying motivation for the contract has also raised eyebrows.  Martin is generally expected to be replaced as FCC Chairman by the next president, after which he may attempt to launch a political career in his home state of North Carolina.  Indeed, some have suggested that Martin’s decision to move forward with this sponsorship is linked to his political future in the state.  Gilliland is based in North Carolina, while NASCAR maintains offices in four North Carolina cities.  Additionally, Martin chose Wilmington, North Carolina as the test site for the switch to DTV.  Considering Martin’s ability to sequester taxpayer money for his prospective constituents, he is well on his way to becoming a successful legislative porker.”

Express your outrage at this government waste. Call your members of Congress. The phone number on Capitol Hill is (202) 224-3121. When you call, tell them ACTA sent you.

October 22, 2008

How About A Pro-Taxpayer Stimulus Bill?

In an open letter to members of Congress today, the National Taxpayers Union writes:

“In light of recent discussions concerning a revived Stimulus 2 bill, I would like to remind you that on September 9, 2008, more than 40 groups representing millions of taxpayers sent an open letter initiated by the National Taxpayers Union urging Congress to "reject a massive increase in government spending disingenuously disguised with a 'Stimulus 2' moniker." Our members know that government doesn't create wealth; it either redistributes or destroys it. Shifting money from individuals to government programs (many with questionable performance records) will not "stimulate" sustainable economic growth.

“In a disturbing development, the pre-bailout House stimulus bill (H.R. 7110) gave spending priority to projects that "can award contracts based on bids within 120 days of enactment." In other cases, it favored "those activities that are labor intensive." Speed and make-work shouldn't be the primary drivers of how taxpayer dollars are spent, and these factors certainly won't foster the growth environment our economy needs to thrive.”

NTU identifies five common sense policy changes for “immediate tax relief for American families and businesses:”

  1. Suspend minimum withdrawal rules for IRAs. No one should be forced to withdraw from their Individual Retirement Account just because they hit a certain age, especially if they'd prefer to wait for a market uptick. This change would address the concerns of older taxpayers, many of whom responsibly planned for their retirements by investing with IRAs.
  2. Schedule a repatriation period for international profits of U.S. companies at a reduced tax rate. A similar window in 2004 resulted in the repatriation of $312 billion, and repeating the exercise now could inject liquidity into U.S. markets. Lowering corporate income taxes would also help.
  3. Address the capital gains tax. Congress should suspend the capital gains tax for two years, make permanent the lower 15 percent rate, or at least index the tax for inflation.
  4. Allow for full and immediate expensing. This would encourage small businesses to invest in the assets (such as equipment and real estate) that could help expand and invigorate operations.
  5. Lock the 2001 federal income tax cuts into place. Every tax bracket received a rate cut, but those lower rates expire in 2010. Families are already looking ahead to the years when Washington will take more of their money. If they can count on current tax rates, many will be more comfortable investing today instead of fearing the tax man’s bigger bite in 2011.

Make your voice heard! Call your congressional representatives on Capitol Hill -- at (202) 224-3121.

October 21, 2008

When “Tax Cuts” Are Really Welfare

Last week, we growled how presidential aspirant Sen. Barack Obama (D) could get away with saying that 95% of Americans would get “tax cuts” when 33% of tax returns are currently “non-paying” returns, and under his tax plan that percentage is likely to rise to 44%. In today’s Wall Street Journal, Bill McGurn explains the “smoke and mirrors:”

“In most parts of America, getting money back on taxes you haven't paid sounds a lot like welfare. Ah, say the Obama people, you forget: Even those who pay no income taxes pay payroll taxes for Social Security. Under the Obama plan, they say, these Americans would get an income tax credit up to $500 based on what they are paying into Social Security. (emphasis added)

“Just two little questions: If people are going to get a tax refund based on what they pay into Social Security, then we're not really talking about income tax relief, are we? And if what we're really talking about is payroll tax relief, doesn't that mean billions of dollars in lost revenue for a Social Security trust fund that is already badly underfinanced?

“Austan Goolsbee, the University of Chicago economic professor who serves as one of Sen. Obama's top advisers, discussed these issues during a recent appearance on Fox News. There he stated that the answer to the first question is that these Americans are getting an income tax rebate. And the answer to the second is that the money would not actually come out of Social Security.

"You can't just cut the payroll tax because that's what funds Social Security," Mr. Goolsbee told Fox's Shepard Smith. "So if you tried to do that, you would undermine the Social Security Trust Fund."

“Now, if you have been following this so far, you have learned that people who pay no income tax will get an income tax refund. You have also learned that this check will represent relief for the payroll taxes these people do pay. And you have been assured that this rebate check won't actually come out of payroll taxes, lest we harm Social Security.

“You have to admire the audacity. With one touch of the Obama magic, what otherwise would be described as taking money from Peter to pay Paul is now transformed into Paul's tax relief. Where a tax cut for payroll taxes paid will not in fact come from payroll taxes. And where all these plans come together under the rhetorical umbrella of "Making Work Pay."”

As always, the devil is in the detail, or should we say in the fine print, or behind the smoke and mirrors. As McGurn explains:

“And that leads us to the heart of this problem. If the government is going to give tax cuts to 44% of American based on their Social Security taxes -- without actually refunding to them the money they are paying into Social Security -- Mr. Obama will have to get the funds elsewhere. And this is where "general revenues" turns out to be a more agreeable way of saying "Other People's Money."”

October 20, 2008

Cut Government Waste Before Raising Taxes

Last week, the Council for Citizens Against Government Waste (CCAGW) and the National Taxpayers Union (NTU) sent an open letter to presidential aspirants Senators McCain (R) and Obama (D) telling the candidates that if they truly wish to cut waste, the two organizations can tell them how. In the October 16 letter (linked  from this press release), they write:

“In your series of Presidential debates, you have both expressed support for the idea of going through the budget "line by line" in order to root out waste and inefficiency. As watchdog organizations dedicated to the elimination of wasteful spending, the National Taxpayers Union (NTU) and the Council for Citizens Against Government Waste (CCAGW) have spent years doing exactly that.

“Both of our organizations maintain extensive lists of programs that could be cut or legislation that would reduce spending. We target programs that are either ineffective or duplicative, or activities best left to state and local governments or the private sector.”

The presidents of the two organizations close the letter saying:

“Whichever one of you emerges victorious from November's election will be faced with difficult choices when it comes to budgets and overall spending. By all accounts, our budget deficit will set a new record and could approach $1 trillion. Fortunately, there is a surplus of methods to achieve real savings for the taxpayer.

“Through suggestions like ours and the important oversight provided by the Congressional Budget Office, the Government Accountability Office, the Office of Management and Budget, and others, a McCain or Obama Administration could make real progress towards a leaner, more effective, and more accountable Federal government.”

Instead of raising taxes, it seems the victorious candidates should first work for a more efficient and economical government.

October 19, 2008

“Joe the Plumber” And The American Dream

Last weekend, presidential aspirant Sen. Barack Obama met “joe the Plumber” in an Ohio neighborhood. According to Gateway Pundit (includes You Tube video)"

“The man asked Obama, "Why do want to raise my taxes? My business makes more than 250k a year." Obama told him he needed to "spread" the wealth to those who don't have what he has.”

In their last debate on Wednesday, both candidates, Sen. John McCain (R) and Sen. Barack Obama (D), invoked “Joe the Plumber” (real name Joe Wurzelbacher) as “a a prop in their final debate, sparring over how their tax plans seek to generate prosperity and benefit average, hardworking Americans,” according to Don Lambro in the Washington Times. Before commenting on both candidates’ tax plans, Lambro writes:

“Mr. McCain, Arizona Republican, says that stronger economic growth flows from low tax rates that unleash private savings and investment capital to expand businesses or help people like Mr. Wurzelbacher to purchase one.

“He says Mr. Obama's plan to increase taxes on those earning more than $250,000 will hurt small-business owners and is an effort to redistribute wealth.

“But Mr. Obama, Illinois Democrat, says that the engine of the economy is the nation's vast working class and that transferring some of the nation's wealth from upper-income Americans to lower-to-middle-income workers will help lead the country out of recession.

"McCain appears to be more concerned about how higher tax rates affect overall economic growth, but Obama says the distribution of the economic pie from all his refundable tax credits for those at the bottom outweigh any adverse economic effect of higher rates," said economist Gerald Prante at the nonpartisan Tax Foundation.”

Leave it to Mark Steyn, however, to express just why “Joe the Plumber” has so excited so many Americans. In his weekend colum in the Orange Couny Register, Mark writes:

“The heart of the American Dream is aspiration. That's why people came here from all over the world. Back in Eastern Europe, the Joe Bidens and Diane Sawyers of the day were telling Joe the Peasant: "Hey, look, man. You're a peasant in the 19th century, just like your forebears were peasants in the 12th century and your descendants will be peasants in the 26th century. So you're never gonna be earning 250 groats a year. Don't worry about it. Leave it to us. We know better." And Joe the Peasant eventually figured that one day he'd like to be able to afford the Premium Gruel with just a hint of arugula and got on the boat to Ellis Island. Because America is the land where a guy who doesn't have a 250-grand business today might just have one in five or 10 years' time.

“I'm with “Joe the Plumber,” not Joe the Hair-Plugger. He's articulated the animating principles of America better than anyone on either side in this campaign. Which is why the O-Bots need to destroy him."

Listen to Joe Wurzelbacher in his own words. In this interview with AP. “Joe talks more common sense in 1:43 minutes than I've heard from virtually all the politicians, combined, who've walked the halls of Congress during the 22 1/2 years I've lived in Arlington County, Virginia.” But then that’s my opinion.  But then again, it might explain why Joe was so “wildly received on Fox News show” on Friday evening, according to this story in today’s Toledo Blade.

UPDATE (10/20/08): Scott Johnson at Power Line says wryly that "Obama's comment betrays a frame of mind that is unpopular among independent, middle-class voters," and provides several additional links to the blogosphere. One of them is to a "delicious set of quotes" by members of the media provided by Rush Limbaugh.

October 18, 2008

Sen. Webb Explains His Bailout Vote

I received the letter below from Senator Jim Webb after contacting his office concerning the recent $700 billion bailout legislation, not to mention the more than $110 billion that was larded onto the bill that essentially bought the votes of some legislators. It’s interesting where Sen. Webb lays the cause of the economic turmoil. However, if he is not aware of the real causes of the financial chaos, i.e., Community Reinvestment Act, including the mid-1990’s amendments, and the cronyism between certain members of Congress and Fannie Mae and Freddie Mac, then Sen. Webb doesn’t deserve to be in the U.S. Senate.

October 16, 2008

Mr. Timothy Wise

Dear Mr. Wise:

Thank you for contacting my office regarding the turmoil in the financial markets that has compromised the solvency of several U.S. financial institutions and has threatened our nation's economy.  I appreciate your taking the time to share your specific views and concerns.

For many years, I have said that the current Administration has failed to exercise appropriate oversight of the nation's banking and corporate sectors, and has promoted policies that reward Wall Street at the expense of Main Street.  The Administration's actions are largely responsible for our current economic crisis, which resulted in President Bush's September 2008 proposal to help restore soundness to U.S. credit markets.

I opposed the original hastily-written and woefully inadequate financial sector bailout bill proposed by President Bush.  In the nearly two weeks after the President's proposal, the U.S. Congress radically changed the original bill to better protect taxpayers and to ensure greater Congressional oversight.  I am pleased that the bipartisan compromise legislation to stabilize our nation's economic system (H.R.1424), which the Senate passed on October 1, 2008 by a bipartisan vote of 74-25, bore no resemblance to the original Bush proposal.  I understand the concerns raised by many Virginians about certain provisions of this legislation that may have been beyond the scope of the bill's intended purpose.  However, I was not given the opportunity to offer amendments to the legislation, and as with any bipartisan initiative, compromise is necessary in order to advance our nation's priorities.

After much deliberation, I voted to support the Senate's economic rescue legislation.  I reached my decision based on the reality that this legislation provides the only possible opportunity that will be offered in the U.S. Congress this year to address our nation's economic crisis.  I am also satisfied that the significant recommendations I offered during the legislation's consideration were incorporated into the admittedly imperfect bill.  Moreover, I was persuaded to support the Senate legislation because it provided meaningful tax relief to hardworking Virginia families and small businesses.

Throughout the bill's negotiations, I was outspoken in support of several basic principles that are essential for the future economic well-being of our country.  For example, I wrote a letter to Senate Banking Committee Chairman Chris Dodd only one day after U.S. Treasury Secretary Henry Paulson announced the original plan.  I spoke twice on the Senate floor about the proposal.  Moreover, I led an effort to convince the Senate Majority Leader to incorporate these principles in any legislation, including them in a letter that was co-signed by eight of my Senate colleagues.

The fundamental principles that I raised included:

  • A grave concern about the transfer of so much financial power and discretion to one individual in the executive branch of government, and the lack of a clear mechanism for the oversight of this unprecedented power;
  • The need for proper limits on executive compensation, and a guarantee that the executives who mismanaged our financial markets not be unjustly enriched by a taxpayer bailout;
  • The need for a guarantee that the American taxpayer be able to share directly in any benefits gained by the rescue legislation;
  • Appropriate limits on the ability of foreign institutions to participate in the program; and
  • The release of federal funds for the program in installments in order to ensure that Congress can properly fulfill its oversight role, and to give Congress time to enact meaningful new reforms to the regulatory structure.

We were able to achieve significant progress in each of these areas.  In particular, I am pleased that the Senate included meaningful provisions in the bill to limit executive compensation and to give taxpayers the chance to share in any gains achieved through this legislation.  These provisions will help to restore taxpayer confidence in our financial system and ease the credit crunch that threatens economic growth.

The President signed the economic rescue legislation into law on October 3, 2008.  Going forward, I will work aggressively with members of Congress from both sides of the aisle to ensure that this new law is implemented fairly, and in a way that safeguards the American taxpayer.  Equally important, the next Congress must restore to our financial system a regulatory structure that will prevent this terrible chapter in American history from ever happening again.

As Congress continues to address issues related to our nation's economy and the well-being of hardworking Virginians, please be assured that your specific views and suggestions will be very helpful to me and my staff.  I hope that you will continue to share your thoughts with us in the years ahead.

I would also invite you to visit my website at www.webb.senate.gov for regular updates about my activities and positions on matters that are important to Virginia and our nation.

Sincerely,

Jim Webb
United States Senator

JW:kw

To contact Senator Webb's office, click here. For a small number of news articles regarding the financial turmoil available at Growls, enter "bailout round-up" in the search facility in the right column. Others will be added soon.

October 17, 2008

'Joe the Plumber' and Income Redistribution

Claudia Rosett, who won two awards for her work on the U.N. Oil-for-Food scandal, wrote about the now famous “Joe the Plumber” (Wall Street Journal podcast) and income redistribution in a story posted at PajamaMedia yesterday. She wrote:

“I’m worried that in the communal paradise promised by (presidential aspirant Sen. Barack) Obama (D), there’s going to be a horrendous shortage of plumbers.

“After all, once Obama’s wealth-spreaders arrive to start carting away more of Joe’s hard-earned money, why should Joe bother with all that hard work? He won’t be doing it for himself, or his family, or his private dreams and ambitions. He’ll be toiling away on other people’s drains so that officials of an extremely large government can take away even more of his income than they do right now.

“Of course, these public servants will have to be paid for their own hard work in deciding where and how to spread Joe’s money around — or whatever is left of Joe’s money, once all the government deciders and spreaders are done with it. If history and human nature are any guide, they will use their powers to foster all sorts of new entitlements and interest groups, on top of the old ones, which will mean even more people figuring out ways to spread around yet more of Joe’s money.

“So, just try phoning Joe the plumber when your sink backs up, or a pipe springs a leak. He’ll have better uses for his time, like not working to make more money so the Obamocracy can take it away.”

In June of 2008, the Gallup organization posted the results of a poll that showed the “lack of support for wealth redistribution spans political party (and) income groups.” They began by writing:

“When given a choice about how government should address the numerous economic difficulties facing today's consumer, Americans overwhelmingly -- by 84% to 13% -- prefer that the government focus on improving overall economic conditions and the jobs situation in the United States as opposed to taking steps to distribute wealth more evenly among Americans.”

As Betsy, who gets the HT, writes at her outstanding blog Betsy’s Page, “Claudia Rosett expresses much better than I can the questions that arise when you start thinking that wealth should be ‘spread around.’”

Sure worth remembering which of the candidates wants to “spread the wealth” when you vote for president on November 4. As we’ve growled on numerous occasions, there are taxpayers and taxeaters (aka taxtakers). Take a stand; don’t vote for tax hikers! And, get a bumper sticker from the National Taxpayers Union’s NoTaxHikers initiative.


October 16, 2008

An Artifact From The Progressives

Scott Johnson, one of the three popular bloggers at Power Line, uses presidential aspirant Democrat Barack Obama’s reponse (“spread the wealth around”) to the Ohio plumber to provide a little history lesson on the federal income tax. Johnson wrote yesterday:

“Despite Obama's implication to the contrary, however, It doesn't represent much in the way of change. According to the most recent (2006) data released by the IRS, the top 1 percent of filers paid nearly 40 percent of all income taxes; the top 5 percent paid 60 percent of all income taxes. The bottom 50 percent paid virtually no income taxes (3 percent of all income taxes paid).”

Scott then provides his history of the federal income tax:

“Given that poorer citizens always outnumber the rich, political philosophers have long worried that government based on majority rule could lead to organized theft from the wealthy by the democratic masses. "If the majority distributes among itself the things of a minority, it is evident that it will destroy the city," warns Aristotle.

“The founders of the United States were deep students of politics and history, and they shared Aristotle's worry. Up through their time, history had shown all known democracies to be "incompatible with personal security or the rights of property." James Madison and others therefore made it a "first object of government" to protect personal property from unjust confiscation. Numerous provisions were included in the Constitution and Bill of Rights to protect the property rights of citizens.

“Given that one of the causes of the American Revolution was a tax, the founders understood very well that taxation could become a way for one group to prey on another. So while the Constitution empowered the federal government to levy taxes, it limited this power mostly to indirect taxes like tariffs, duties, and excise taxes. For much of American history the federal government subsisted solely on those fees.

“The Constitution did grant the federal government the power to levy "direct" taxes on a "per head" basis, but required that all money raised this way must be given to the states according to their population. The aim here was to preserve a decentralized federal system of rule, and to make it "difficult to place a direct tax on capital, the most destructive tax in terms of economic growth and economic initiative," according to Professor Edward Erler.

“Until the Civil War, the idea of a tax on individual incomes would have seemed preposterous to most Americans. Only as an emergency wartime measure did Congress adopt an income tax in the 1860s, and the measure was allowed to lapse with little fanfare in 1872. Estimates vary regarding the percentage of citizens affected by the income tax of this era, but none places it at more than 10 percent.

“The modern income tax begins with the Progressive era in American politics. In an influential 1889 article entitled "The Owners of the United States," crusading attorney Thomas Shearman argued that the lion's share of the country's wealth was in a limited number of hands. If an income tax was not adopted, he warned, within 30 years "the United States of America will be substantially owned" by 50,000 people.

“This marked the beginning of a never-ending campaign. Many activists since have characterized America as a permanent plutocracy. And their prescription has generally been more and higher taxes.

“Shearman's advocacy of an income tax found a receptive audience in populist politician William Jennings Bryan. Exploiting the dire economic circumstances created by the depression of 1893, Bryan avidly promoted the adoption of an income tax. His proposal succeeded when Congress passed a 2 percent flat tax on incomes over $4,000 in 1894. The following year, however, the Supreme Court held the tax to be unconstitutional.

“In response, Progressives condemned the Constitution as an instrument crafted by the rich to protect their selfish interests (Allen Smith), and a document rendered obsolete by intellectual progress in the century since its drafting (Woodrow Wilson).

“The Progessive condemnation of the Constitution climaxed in 1913 with the publication of An Economic Interpretation of the United States Constitution by Columbia history professor Charles Beard. Beard purported to expose the Constitution as the handiwork of a propertied elite serving its own interests to the exclusion of the majority.

“Few works of American history have been more erroneous than Beard's, as later shown by debunking historians like Robert Brown and Forrest McDonald. But by the time scholarship caught up with Beard's book, a lot of damage had been done. Frenzied attacks on "the rich" and "the wealthy" culminated in the ratification of the Sixteenth Amendment in 1913, authorizing federal taxation of income from all sources without limit.

Johnson then asks, “why hasn't the majority in America helped itself to more of the minority's wealth, as Aristotle and our founders feared? And, then answers:

  1. “Partly because the protections for individual property erected by the founders have worked.”
  2. “Partly, too, because many Americans' political convictions are (thankfully) based on principle rather than immediate economic self-interest.”
  3. “And partly because the fraction of Americans who think of themselves as rich, or likely to become rich in the future, is quite large, undercutting the incentive for bashing the rich.

Scott then concludes by saying: “Obama's appeal for higher taxes to "spread the wealth around" nevertheless harks back to an old theme in political philosophy and American politics. You can believe in it, but it's not exactly change, and it is more to be worried about than hoped for.

The so-called Progressives may have done some good, but that certainly doesn't include the Sixteenth Amendment and the federal income tax. And, thanks Scott for that short, but valuable, history lesson.

October 15, 2008

The Wisdom of Alexis de Tocqueville

“Alexis-Charles-Henri Clérel de Tocqueville (July 29, 1805 – April 16, 1859) was a French political thinker and historian best known for his Democracy in Americ," according to Wikepedia, which adds:

“(America’s) rapidly democratizing society, as Tocqueville understood it, had a population devoted to "middling" values which wanted to amass, through hard work, vast fortunes. In Tocqueville's mind, this explained why America was so different from Europe. In Europe, he claimed, nobody cared about making money. The lower classes had no hope of gaining more than minimal wealth, while the upper classes found it crass, vulgar, and unbecoming of their sort to care about something as unseemly as money; many were virtually guaranteed wealth and took it for granted. At the same time in America workers would see people fashioned in exquisite attire and merely proclaim that through hard work they too would soon possess the fortune necessary to enjoy such luxuries.”

The wisdom of de Tocqueville is also shown in some of his quotations, including the following taken from Brainyquote.com:

  • “The American Republic will endure, until politicians realize they can bribe the people with their own money.”
  • (alternative shown) “The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money."
  • "Liberty has never come from the government. Liberty has always come from the subjects of government. The history of liberty is the history of resistance. The history of liberty is a history of the limitation of governmental power, not the increase of it."
  • “A democratic government is the only one in which those who vote for a tax can escape the obligation to pay it.”
  • “America is great because she is good. If America ceases to be good, America will cease to be great.”
  • “Democracy and socialism have nothing in common but one word, equality. But notice the difference: while democracy seeks equality in liberty, socialism seeks equality in restraint and servitude. ”
  • “The greatness of America lies not in being more enlightened than any other nation, but rather in her ability to repair her faults.”
  • “The health of a democratic society may be measured by the quality of functions performed by private citizens.”
  • “The power of the periodical press is second only to that of the people.”
  • “There is hardly a pioneer's hut which does not contain a few odd volumes of Shakespeare. I remember reading the feudal drama of Henry V for the first time in a log cabin.”

October 14, 2008

Walter Williams on Socialism

Dr. Walter E. Williams, professor of economics at George Mason University, is interviewed at National Review Radio about his new book, Liberty versus the Tyranny of Socialism: Controversial Essays.

The editorial review at Amazon.com says the book is a “collection of his newspaper columns” where he “takes on the left wing's most sacred cows” on such topics as “education, health, the environment, government, law and society, race, and a range of other topics, always with an uncompromising reverence for personal liberty and the principles laid out in our Declaration of Independence and Constitution.”

The interview lasts a little over 10 minutes, and it’s worth every minute -- but then I’m biased when it comes to the wisdom of Walter Williams.

HT Dominic Rupprecht at National Taxpayers Union’s Government Bytes.



 

October 13, 2008

The Meaning Of ‘Tax Cut’ Is . . .

Today’s Wall Street Journal editorializes on the campaign claim of presidential aspirant Barack Obama, writing:

“One of Barack Obama's most potent campaign claims is that he'll cut taxes for no less than 95% of "working families." He's even promising to cut taxes enough that the government's tax share of GDP will be no more than 18.2% -- which is lower than it is today.

“It's a clever pitch, because it lets him pose as a middle-class tax cutter while disguising that he's also proposing one of the largest tax increases ever on the other 5%. But how does he conjure this miracle, especially since more than a third of all Americans already pay no income taxes at all? There are several sleights of hand, but the most creative is to redefine the meaning of "tax cut."

“For the Obama Democrats, a tax cut is no longer letting you keep more of what you earn. In their lexicon, a tax cut includes tens of billions of dollars in government handouts that are disguised by the phrase "tax credit."

The Journal notes he has proposed “to create or expan no fewer than seven such credits for individuals.” Such things as a $500 tax credit to”make work pay,” or a 10% mortgage interest tax credit, which is in addition to the existing mortgage interest deduction.

As we growled on September 20, there are taxpayers and taxtakers, and under Obama’s plan, the number of taxtakers would grow to 44% of all tax filers. Those numbers are not our creation, but rather come from the Tax Foundation. Oh, and while Obama likes to trash the policies of the Bush administration, the Tax Foundation reported a “dramatic 57 percent increase since 2000 in the number of Americans who pay no personal income taxes.”

Wall Street Journal’s William McGurn concluded his column last Tuesday by writing:

“Barring divine intervention, a President Obama would not have a Republican Congress to worry about. Instead, he would be working with a Democratic speaker of the House who loaded billions in pork onto a bill meant to fund our troops; with a Democratic Senate majority leader who promised to change the way Congress spent but fought earmark reform; and with committee leaders such as Sen. Chris Dodd and Rep. Barney Frank, who did so much to bring us the financial implosion of Fannie Mae and Freddie Mac.

“In this kind of Washington, the American taxpayer could use a Gary Cooper: the "High Noon" lawman willing to stand up for us when everyone else is ducking for cover. Marshal McCain, anyone?” (emphasis added)

Hmmmm? 95% will get a tax cut, but 44% of tax filers pay no taxes. Can someone do the math? And check the graphic that accompanied the Journal's editorial today:

 

October 12, 2008

One-Minute Lessons in Political Economy

Regular readers of the Cafe Hayek blog, maintained by Don Boudreaux, chairman of the economics department at George Mason University and his department colleague Russ Roberts, look forward, I’m sure, to the pithy letters to the editor posted by Mr. Boudreaux. Provide your e-mail address to the blog, and you realize just how much of an education in political economy you can receive in just a minute or two each day.

Take, for example, this letter he sent to the New York Times that he posted today. On  Wednesday, the Times had denounced one candidate for denouncing the other candidate in the previous evening’s presidential debate “for receiving campaign money from Fannie Mae and Freddie Mac.” Although the Times may have been correct, Mr. Boudreaux pointed out the fact didn’t distinguish the candidate. He then went on to write:

“Among the articles of faith of "progressivism" is the theory - which never yields to experience - that you can fill the sea with enormous quantities of fresh red meat and then, Moses-like, successfully command the sharks not to devour it.

“As long as Uncle Sam continues to stock the Potomac by ripping from the body politic such enormous quantities of flesh and muscle - now more than three trillion dollars worth annually - sharks and vultures will inevitably swarm throughout Washington in a competitive struggle to gorge themselves on this unfortunate feast.”

About as good a reason for limited government and adherence to the Constitution as I’ve seen. Bookmark the Cafe Hayek, and visit it often!

p.s. And like most great blogs, the comments are often as good if not better than those of the blogger. For example, John V adds, "And that's just the money part of the equation. Then there's the rules, regulations, and special interest legislation that twist and influence market forces and orders to the advantage of some market players and at the expense of others. That's priceless for these parasites."

October 11, 2008

Change in Mindset Definitely Needed

Just three days ago, we growled about Arlington County bureaucrats tooling around on their $490 adult tricycles with plans to buy “five or six more . . . in the near future.” The very next day the county's spinmeisters issue this press release announcing a hiring freeze and sundry other spending reductions. Talk about the left hand not knowing what the right hand is doing. According to a page 2 Metro section story in today’s Washington Post:

“The county faces a $10 million deficit for fiscal 2009, while the school system, which receives most of its funding from the county, faces a $7.5 million shortfall, County Manager Ron Carlee announced Thursday.

“Facing the first significant budget deficit since the early 1990s, the county will begin reviewing operations to close the gap to determine what spending is mandated or essential to the community and what is discretionary, Carlee said. The county might be able to shave expenditures by looking at ways to consolidate services and form partnerships with service providers. At the same time, Carlee said, officials will search for ways to be responsive to residents who might already be hurting because of the faltering economy.”

That little budgetary juxtaposition should be as equally offensive to taxpayers as a couple of the comments in the Post story, for example:

"We don't know at this point what some of the things are that we need to do to reduce spending," said Arlington County Board Chairman Walter Tejada (D). Except for essential spending, he said, "everything is on the table."

What? The chairman of the board doesn’t know which items in the annual budget are the lowest priority? Didn't he campaign on a platform of fiscal responsibility? Or this from the school superintendent who said:

“it would also be difficult to identify places to trim, because 80 percent of the school's budget is accounted for by contracted services. The most likely candidates for reducing spending might involve postponing spending on capital improvements, such as putting off renovation of an HVAC system, he said.”

How about increasing class sizes a bit? After all, the windfall profits that the county and schools reaped from the near-doubling of real estate property assessments during the first half of this decade enabled schools management to significantly reduce class sizes in the Arlington Public Schools. Or take the schools  off the ill-conceived revenue sharing agreement, which allowed the schools to avoid managing for efficient and economic operations? Or call for an outside efficiency audit/review under the state program established several years ago for that express purpose? "Difficult to identify places?" Perhaps the next superintendent of schools should have an MBA degree rather than an education PhD?

Could these guys ever make it in private industry? Not likely, and it's why a new mindset is needed.

October 10, 2008

The Wisdom Of Thomas Sowell

If there was ever a day to turn to the wisdom of economist Thomas Sowell, a day that saw a swing in the Dow-Jones Industrial Average of over 1,000 points, today has to be one of them. Here are five Thomas Sowell “thoughts” selected from Liberty-Tree Quotes:

  • "One of the sad signs of our times is that we have demonized those who produce, subsidized those who refuse to produce, and canonized those who complain."
  • "Compassion is the use of public funds to buy votes."
  • "One of the reasons for conspiracy theories is an assumption that people in high places always know what they are doing. When they do something that makes no sense, devious reasons are imagined by conspiracy theorists, when in fact it may be due to plain old ignorance and incompetence."
  • "The fatal attraction of government is that it allows busybodies to impose decisions on others without paying any price themselves. That enables them to act as if there were no price, even when there are ruinous prices -- paid by others."
  • "We seem to be getting closer and closer to a situation where nobody is responsible for what they did but we are all responsible for what somebody else did.

October 09, 2008

Lesson From The Bailout (Bailout Round-up V)

Dr. Walter E. Williams, economics professor at George Mason University, writes in his Townhall.com column yesterday of “lessons from the bailout.” The following, in my opinion, however, is lesson #1:

“The financial collapse of Fannie Mae and Freddie Mac is not a failure of the free market because lending institutions in a free market would not have taken on the high-risk loans. They were forced to by the heavy hand of government. The solution is not a taxpayer-financed bailout. The solution is to let them fail and allow the people who invested in them, as well as the people who purchased homes they couldn't afford, suffer the losses. Of course that takes a level of political courage that is in short supply.”

In short supply? Indeed, even in very short supply!

October 08, 2008

Staff On Trikes

Recall the “brain on drugs” public service ad, or PSA, where an egg was dropped into a hot frying pan (see it here at You Tube)? Well, Arlington County taxpayers will soon see county staff tooling around the county on the $490 “fully-loaded” adult tricycles, which are being called “Trikes.” Taxpayers will be able to say, "Hey, staff on trikes." Six have been purchased with plans to order “five or six more trikes in the near future,” according to an online story posted today at the Arlington Sun-Gazette. According to the Sun-Gazette:

“The trikes . . . will be used when employees have short hops to take. They will be housed at Central Library, the Department of Human Services and the county government's motor-pool headquarters.

“Employees who want to use the trikes put in their request with the motor pool, and are issued keys for the locks. They also will receive a helmet, which will be theirs to keep, and must wear the helmet when out on business. A rear basket is an added touch.

“The trikes are designed mostly for official use, but,” but a county spokesperson “said that if any are available during the lunch hour, employees will be able to take them out for a healthy spin.”

Remember, it’s being done in the name of satisfying the environmental gods, i.e., to “reduce the environmental footprint of municipal workers.”  The national drug czar had the “brain on drugs” PSA’s, and now the environmental gods will have their “staff on trikes.” Always paid for by the taxpayers, of course. Visit the Sun-Gazette's website to see a picture of the County Manager on his trike.

October 07, 2008

“59% Agree With Ronald Reagan”

In a new poll released last Friday, Rasmussen Reports (tm) writes:

“In his first inaugural address, President Ronald Reagan delivered a line succinctly capturing the sentiment that elected him: “Government is not the solution to our problem; government is the problem.”

“A generation later, that attitude still resonates with a solid majority of Americans. A new Rasmussen Reports national telephone survey finds that 59% of voters agree with Reagan, and just 28% disagree.

“Support is found across a wide range of political and demographic groups. Sixty-seven percent (67%) of men agree with Reagan, as do 52% of women. A majority of voters in all age and income groups agree.

“The only demographic group to disagree with Reagan’s statement are those who identify themselves as politically liberal. Just 35% of liberals agree that government is the problem, but 46% disagree. Moderates embrace the Reagan view by a 61% to 25% margin, and conservatives are even more enthusiastic.”

Ronald Reagan also said, "Government may protest that it never gets the money it needs, but it always manages to find a need for the money it gets." Not to mention spending money it doesn’t have.

October 06, 2008

Bailout Round-up IV: The Cost

Last “round-up” was September 30 if you wish more background information.

Warning! It may help to be seated while reading the amount of the bailouts of 2008. The “possible total cost" could be greater than $1.8 trillion, according to this CNET news report. However, they also note that it may be just the beginning, e.g., “California Gov. Arnold Schwartzenegger said Thursday that the state may need a $7 billion loan from the U.S. Treasury.” CNET has a helpful table listing the various bailouts and their cost, starting with the $700 billion bailout package, which is what most news reports identify. H/T Taxing Tennessean.

It’s more than the $700 billion cost of the original bailout package that increased to over $800 billion because of the so-called “tax sweeteners” added by the Senate. Taxpayers for Common Sense (TCS) has a great deal more information here, including links to the legislation, the 263-171 vote in the House last Friday, various statements and analyses by TCS, and links to several news sources.

TCS also provides these “top 10 tax sweeteners” that were “in the bailout bill.” Here is just the most outragous:

“1. Sec. 503. Exemption from excise tax for certain wooden arrows designed for use by children

“Current law places an excise tax of 39 cents on the first sale by the manufacturer, producer, or importer of any shaft of a type used to produce certain types of arrows. This proposal would exempt from the excise tax any shaft consisting of all natural wood with no laminations or artificial means to enhance the spine of the shaft used in the manufacture of an arrow that measures 5/16 of an inch or less and is unsuited for use with a bow with a peak draw weight of 30 pounds or more. The proposal is effective for shafts first sold after the date of enactment. The estimated cost of the proposal is $2 million over ten years, according to the Joint Committee on Taxation.

“The Oregon senators were the initial sponsors of the provisions. According to Bloomberg News, the provision would be worth $200,000 to Rose City Archery in Myrtle Point, Oregon.”

CNET also provides the “possible cost per household.” Divide that $1.8+ trillion cost of this year’s bailouts by the almost 105.5 million households, and the cost per household could be over $17,064. That is nothing but breathtaking.

p.s. Here are two Congressional Budget Office letters with further details on cost -- September 28 letter and October 1 letter.

October 05, 2008

Thomas Sowell Asks, “Do Facts Matter?”

Long-time fans of ACTA’s newsletter, The ACTA Watchdog, understand why so many taxpayers are founding members of the Thomas Sowell fan club. His October 3 column at Townhall.com column cannot do anything other than solidify his standing with taxpayers. Sowell opens his column in which he presents facts about the current so-called financial crisis by commenting:

“Abraham Lincoln said, "You can fool all the people some of the time and some of the people all the time, but you can't fool all the people all the time."

“Unfortunately, the future of this country, as well as the fate of the Western world, depends on how many people can be fooled on election day, just a few weeks from now.”

While some may consider the column as partisan, the veracity of Sowell’s “facts” are beyond question. Read the entire column, and decide for yourself.

October 02, 2008

Thought for Today

"I have little interest in streamlining government or in making it more efficient, for I mean to reduce its size. I do not undertake to promote welfare, for I propose to extend freedom. My aim is not to pass laws, but to repeal them. It is not to inaugurate new programs, but to cancel old ones that do violence to the Constitution, or have failed their purpose, or that impose on the people an unwarranted financial burden. I will not attempt to discover whether legislation is 'needed' before I have first determined whether it is constitutionally permissible. And if I should be attacked for neglecting my constituents' 'interests,' I shall reply that I was informed that their main interest is liberty, and in that cause I am doing the very best I can."

    -- Barry Goldwater, "Conscience of a Conservative" (1960)

October 01, 2008

Thoughts For Today

"The tyranny of a prince is not so dangerous to the public welfare as the apathy of a citizen in a democracy."

   -- Montesquieu, 1748

"“A democracy cannot exist as a permanent form of government. It can only exist until a majority of voters discover that they can vote themselves largess out of the public treasury.”

    -- Alexander F. Tytler (Lord Woodhouselee) 1747-1813

"Democracy extends the sphere of individual freedom, socialism restricts it.  Democracy attaches all possible value to each man; socialism makes each man a mere agent, a mere number.  Democracy and socialism have nothing in common but one word: quality.  But notice the difference:while democracy seeks equality in liberty, socialism seeks equality in restraint and servitude."

    -- Alexis de Tocqueville