Saturday, February 06, 2010
A BIRTHDAY TO REMEMBER
Today is the Gipper's birthday. If only we still had him with us
Feb. 6, is the 99th anniversary of the birth of Ronald Reagan, the 40th president of the United States. Although it has been 21 years since President Reagan completed his second term and left the White House, he still remains a figure of great interest to many Americans, including a large number of young people who were not even born during the time he was president.
New books come out about Reagan every year. The more research that is done about him, the greater the appreciation of what he accomplished and of him as a person. During 2008 Reagan was the president whose name was most mentioned in the debates of both parties, as an example of an effective leader the candidates wished to follow. Since he left office, Ronald Reagan has been the standard to which subsequent presidents have been compared. In numerous polls Reagan has been selected as one of the outstanding presidents in the history of the country
Obama's 2011 Budget Tax Hikes Contradict Focus on Job Creation
President Obama has said his number one goal for 2010 is to create jobs, but the abundance of tax increases in his recently released 2011 budget contradict this objective. Higher taxes on businesses, upper-income taxpayers, and fossil fuels; an increased death tax; and new taxes to pay for health care would destroy jobs and slow economic recovery. Congress should reject these higher taxes and the rest of its business-killing agenda to speed economic growth and encourage job creation.
President Obama's 2011 budget calls for $2 trillion in higher taxes over 10 years--after accounting for the $154 billion in tax cuts called for in the budget. This would be a $17,000 tax increase for every American household during that span. This figure does not include possible revenue from the cap-and-trade legislation currently before Congress.
The budget claims additional tax cuts, such as the Making Work Pay credit for 2011 and 2012, the research and experimentation credit, and bonus depreciation for certain assets. Each of these provisions is an extension of current policy and should not count as an additional tax cut. The tax increases proposed in the budget break down into six broad categories:
1. Higher Taxes on Businesses. The higher taxes on businesses include the recently proposed "bank tax" that is supposed to recapture the money lent to big banks as part of the TARP program--even though most of the banks hit by the tax have already paid back the funds they received. The Obama budget would also repeal the "last in, first out" method of inventory accounting that allows businesses to deduct their more costly inventory from income first. This would increase taxes for many businesses.
The most damaging tax increase on businesses, however, would be the higher levies on businesses operating internationally. The budget would restrict their ability to deduct interest expenses associated with foreign income until the business recognizes it in the U.S. The budget would also make it more difficult for businesses operating internationally to claim a credit for taxes paid in foreign countries, increasing the likelihood of double taxation.
The U.S. is the only country in the world that taxes the overseas income of its businesses. All other countries tax only income earned within their borders. To help level the playing field, the tax code allows businesses with foreign income to pay tax only when businesses bring the income back to the U.S. This tax credit prevents them from paying tax on income already taxed by other countries.
Changing these provisions will substantially increase taxes on U.S. businesses that operate overseas and, in doing so, hurt job creation at home. Higher taxes will further encourage these businesses to keep their income earned abroad in those foreign countries and invest it there. They will move jobs they would have created in the U.S. to other countries. Not only will this reduce employment in the U.S., it will depress wages for existing workers.
Going after businesses that operate internationally is a backward method of job creation that is akin to trade protectionism. The U.S. already has the second highest corporate income tax in the world, trailing only Japan. Implementing these provisions would only further reduce America's international competitiveness and discourage businesses from opening new ventures in the U.S.
2. Higher Taxes on Upper-Income Earners. President Obama's 2011 budget would allow the 2001 and 2003 tax cuts to expire for families making over $250,000 a year and raise their top two marginal tax rates from 33 and 35 percent to 36 and 39.6 percent, respectively. The budget would also limit the amount these families could deduct from their income and reduce their personal exemptions. President Obama also proposes raising the tax rates on dividends and capital gains from 15 percent to 20 percent for taxpayers with incomes over $250,000 a year.
Each of these provisions would hurt economic growth and lead to slower job and wage growth. Higher income taxes on high-earners would decrease investment, which would lead to fewer new businesses opening and dissuade existing businesses from expanding operations. Higher taxes on dividends and capital gains would drive the cost of capital higher, which would compound the problem.
President Obama would also hammer taxpayers that move income offshore with higher taxes. To the extent these taxpayers are engaging in illegal activity, they should be prosecuted. But most of the taxpayers that move their income offshore do so legally because of high capital taxes in the U.S. The answer to this problem is not to make the U.S. even less inviting for capital investment but to reduce capital taxes to keep that money here so it can support domestic job creation.
3. Death Tax Increase. The dreaded estate tax, better known as the "death tax," expired on January 1. This was the result of a decade-long policy that reduced the tax and finally repealed it for 2010. But due to budgeting quirks, the tax comes back to life in 2011. The Obama budget stealthily increases it by assuming in its baseline that Congress will vote to continue the death tax at 2009 levels (45 percent rate and $3.5 million exemption) starting in 2011 and beyond. If Congress continues the tax, it would be a tax increase, and the budget should explicitly count it as such.
The budget would also increas taxes on family farms and businesses. When the death tax was active, family farms and business could discount asset values to account for the fact that it is difficult to sell them in order to pay the death tax. The Obama Administration would disallow this discount and force families to pay the death tax on the full value of the assets, even though there would be no new cash generated to pay the tax. The budget would also make it more difficult for family-owned businesses to protect their business from the death tax as it grows. Repealing the death tax permanently would create 170,000 to 250,000 jobs each year.
4. Higher Energy Taxes. The budget increases taxes on oil, gas, and coal companies by repealing several tax credits available to these businesses.
These energy companies would undoubtedly pass these tax increases on to customers in the form of higher prices, which will increase costs across the entire economy. And higher taxes on energy would act as yet another deterrent to job creation, since they increase the cost of doing business, which includes hiring new workers and retaining existing ones.
5. Health Care Taxes. The budget creates an allowance for revenue raised due to health care reform. Since a final bill is not complete, it is not possible to know what specific taxes would pay for health care reform if it passes Congress.
The taxes included in the separate House and Senate bills--and a variety of other taxes proposed but not included in either bill--are the best guide available to which taxes could do the job. Each of these taxes would have their own punitive effect on the economy and each would hinder job creation in its own way.
6. Other Taxes. The budget includes several other tax increases, including taxing carried interest as regular income, closing the tax gap through stricter enforcement, more taxes on businesses, and making the unemployment insurance surtax permanent.
President Obama has said repeatedly that job creation is his number one priority in 2010. But if Congress passes the tax hikes included in the budget into law, countless jobs will be destroyed.
Congress should pass on these tax hikes and drop the anti-business legislation it is currently considering. Legislation such as health care reform, cap and trade, card check, and other regulations are plaguing businesses with uncertainty that is preventing them from expanding, taking on new risk, and adding new workers. Unfortunately, all the new taxes proposed in President Obama's budget will only add to their worries.
Liberal Economic Illiteracy
When it comes to economic policy, there's stupid, breathtakingly stupid — and liberalism. Thursday, in another mind-numbing display of ideology-driven stupidity, Senate Democrats passed new budget rules only a liberal could believe will make it harder to run up the deficit: they will make it as difficult as possible to extend the current tax cuts, or enact new ones.
This is precisely what happens to people suffused with an ideologically-inflamed sense of superiority. They truly believe that both common sense — and historical evidence — are irrelevant considerations with respect to economics. For example, it doesn't matter one iota that there have been three major tax cuts initiated by three different presidents since the 1960s — and every one of them resulted in increased revenue flowing into federal coffers. It doesn't even matter that the largest one was passed, not by a Republican president, but by Democrat John Fitzgerald Kennedy.
Here's what one of the American left's most cherished icons had to say about the subject: "Lower rates of taxation will stimulate economic activity and so raise the levels of personal and corporate income as to yield within a few years an increased-not a reduced-flow of revenues to the federal government."
Anyone seriously believe JFK wouldn't be drummed out of the current Democrat party for spouting such "heresy?"
Liberals would like the public to believe they can't make a connection this simple: Americans who have more of their own money to spend actually spend it. This produces more economic activity. More economic activity produces greater amounts of taxable income. Greater amounts of taxable income produce greater amounts of revenue for the government. Greater amounts of revenue for the government more than offset revenue lost from the original tax cuts. Game, set, match.
What a lot of Americans don't know is that liberals can indeed make the connection, but they resist it for one simple reason: more private sector success equals less need for government. Less need for government equals less power for big-government liberals. Less power for big-government liberals with monstrous, "we know what's better for you than you do" egos equals an unacceptable trade off. Game, set, match — and screw the country.
In other words, this is a naked power grab courtesy of a Democratically-controlled Congress which has spent every dime we've sent them — plus trillions more in deficit spending. Liberals love to characterize such insanity as "taking care of the little guy" or instituting "social justice."
Absolutely nothing could be further from the truth. Ten percent of America is unemployed and these hacks actually think that makes it the perfect time to take even more of our hard-earned wages — or in the case of far too many Americans, our savings — and spend it on whatever suits their fancy.
Even more infuriatingly, the left's media lapdogs will tout this unconscionable heist as "Democrats getting serious about fiscal responsibility."
I've said it before to liberals and I'll say it again: keep it up, comrades. Keep it up until even the deepest Kool-aid drinkers recoil in disgust. Keep it up until those with no memory of the Carter years learn their own historical lessons firsthand. Experience is by far the best teacher, and when Americans get tired of experiencing high unemployment, exploding deficits and ever-greater losses of economic and personal freedom, you'll all be tossed under the bus. It couldn't happen to a more deserving bunch of egotistical ideologues.
Dodgy jobs data: "The US economy lost 20,000 jobs in January while the unemployment rate fell, according to official data that offered mixed signals about prospects for a sustainable recovery. The Labor Department report, seen as one of the best indicators of economic momentum, puzzled analysts since the two surveys used offered a vastly different picture of the labour market. The report released overnight showed the jobless rate eased to 9.7 per cent from 10.0 per cent in December, based on a household survey that appeared to contradict the payrolls data, but reflected in part discouraged workers leaving the labour force. The nonfarm payrolls data fell short of expectations for a gain of 15,000 jobs that would have been a clear sign of a turnaround in the troubled labour market... The divergent paths for payrolls and unemployment stem from the use of two separate surveys that often provide conflicting results. The payrolls figures, often seen as a more reliable indicator of hiring, comes from a survey of 140,000 businesses, while the jobless rate is calculated from a survey of 60,000 households." [General population surveys are easier to "fiddle"]
Social security is finally broke: "Don't look now. But even as the bank bailout is winding down, another huge bailout is starting, this time for the Social Security system. A report from the Congressional Budget Office shows that for the first time in 25 years, Social Security is taking in less in taxes than it is spending on benefits. Instead of helping to finance the rest of the government, as it has done for decades, our nation's biggest social program needs help from the Treasury to keep benefit checks from bouncing -- in other words, a taxpayer bailout.... years earlier than projected, Social Security is adding to the government's borrowing needs... this year's Social Security cash shortfall is a watershed event. Until this year, Social Security was a problem for the future. Now it's a problem for the present.
How to Make a Weak Economy Worse: "You get the feeling President Obama is girding for battle with the financial sector. In last week's State of the Union address, he promised to regulate the industry. On Jan. 21, he was blunter, warning that he would not let companies that enjoyed "soaring profits and obscene bonuses" block his financial reforms. "If these folks want a fight," he said, "it's a fight I'm ready to have." This declaration of war echoes that of Franklin Delano Roosevelt. In 1936, late in his campaign for a second presidential term, FDR spoke of the challenges of "business and financial monopoly, speculation, reckless banking." Wall Streeters and businessmen hated him, he said, adding that "I welcome their hatred." Mr. Obama might want to stick to a moderate approach. FDR's war against business played to the crowd, but it hurt the economy. While monetary policies impeded recovery in the late 1930s, it was the administration's assault on companies and capital that ensured the Depression's duration.... The attacks started with taxes. In 1935, well before the "hatred" speech, FDR led Congress in passaging a law that replaced a flat rate on corporate income with a graduated rate—itself a penalty on larger firms....Even John Maynard Keynes chided FDR for his attitude about businessmen: "It is a mistake to think they are more immoral than politicians." Among themselves, the New Dealers acknowledged failure. FDR's second Treasury Secretary, Henry Morgenthau, eventually determined that the problem was lack of what he labeled "business confidence."
Denmark shows the way: "Danish special forces have stormed a Slovenian cargo ship which had been captured by pirates in the Gulf of Aden, freeing the 25 crew members, a spokesman for the EU's anti-piracy naval force says. "It's the first time that an assault of this nature has taken place,'' John Harbour, spokesman for the European Union Naval Force (NAVFOR) said today. The operation took place around 1100 GMT yesterday (10pm yesterday AEDT) soon after the pirates seized the Antigua and Barbuda-flagged cargo ship Ariella. The ship's crew had managed to send out a distress signal which the international coalition forces patrolling the waters off Somalia intercepted. A plane from the EU anti-piracy force flew to the spot and called on a Danish NATO ship in the area to intervene with its special forces. That was made possible after the whole ship's crew managed to lock themselves into a room on board, the spokesman said."
Afghanistan situation no longer deteriorating says Stanley McChrystal: "The American commander who warned in September of "failure" in Afghanistan has said that the situation there is no longer deteriorating and President Barack Obama's troop surge has set the stage for "real progress" in 2010. Speaking in Istanbul before the anticipated offensive against the Taliban-held town of Marja in southern Helmand, Gen Stanley McChrystal gave a strikingly upbeat assessment of the situation in the country he said last year was in danger of slipping into Islamist hands. The Marja offensive is widely viewed as the first major test of Gen McChrystal's counter-insurgency doctrine... Gen McChrystal conceded that it was "unconventional" to announce the Marja offensive beforehand because it gave the Taliban the opportunity to flee, bury bombs and fortify. The aim, however, was to send a message to insurgents that "it's about to change" and to Afghans that the writ of their government was about to be extended. "If they want to fight, then obviously that will have to be an outcome. But if they don't want to fight, that's fine, too, if they want to integrate into the government. "The biggest thing is in convincing the Afghan people. This is all a war of perceptions."
Dutch must help Iran with nukes: "Students from Iran can take nuclear courses in the Netherlands after all. A judge in The Hague ruled yesterday that the government is not allowed to exclude them. The judge ruled that the Iranians were discriminated against by the exclusion regulation. This regulation, introduced based on a UN resolution by Education Minister Ronald Plasterk and Foreign Minister Maxime Verhagen, will now have to be scrapped. A group of Iranian Dutch were opposing the sanction measure excluding students from Iran from certain Master's courses and studies at certain locations, including the nuclear installations in Petten and Borssele. Verhagen had not yet commented on the verdict yesterday. The measure was intended to prevent Iranian students from being able to collect information that could help with the making or spread of nuclear weapons. In the past, nuclear secrets came into the hands of a number of countries via an Iranian nuclear physicist who took them with him from Dutch uranium processing company Urenco."
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The Big Lie of the late 20th century was that Nazism was Rightist. It was in fact typical of the Leftism of its day. It was only to the Right of Stalin's Communism. The very word "Nazi" is a German abbreviation for "National Socialist" (Nationalsozialist) and the full name of Hitler's political party (translated) was "The National Socialist German Workers' Party" (In German: Nationalsozialistische Deutsche Arbeiterpartei)
Posted by JR at 10:52 PM