Sorry I've been gone for a while, but I've had a bear of a sickness lately and haven't done much but read about my favorite football team. (American football, not soccer)
Antibiotics have finally kicked in... it only took two doctors and two months to get them to prescribe it after I started getting far worse... so I'm feeling much better now.
And in time for the election tomorrow, too.
As for Kathy's question about tax credits for moving businesses out of the country, Obama's probably correct. There are thousands of little pieces of the tax code that do contradictory things, most of them put in by individual Congressmen or Senators into a much larger bill as riders or earmarks, usually to help a specific campaign contributor or business in his/her district. That there are tax laws like that in place is a disgrace. The tax code is so large that nobody knows everything that's in it, but what's most important is the big picture when it comes to taxes. I say simplify the whole thing and toss out all the special interest tax laws, but that was done once in 1986. But like cockroaches, they survive and come back little by little.
As for bad associations, people point out G. Gordon Liddy as the bad guy McCain's been associated with. What's he done that's comparable to all the bad guys associated with Obama? He was part of a group of third-rate burglars stealing information from the DNC headquarters at the Watergate Apartments. He was convicted and did his time and is now a radio talk show host, often regretting what he did earlier. He is not an unrepentant terrorist. And McCain was still an active duty Naval officer at the time Liddy got out, not even in politics yet.
Charles Keating was also brought up, but people forget that McCain was exonerated in court as a member of the Keating Five. Some say the prosecutors went after him just to fill a Republican quota since the other four were Democrats.
And what do you know? The Keating Five was a banking scandal where Dems were up to their eyeballs with sweetheart mortgage deals just like Jim Johnson and other Democrats are tied in with Countrywide Mortgage today. Some things never change.
Fast forward a few years and once again, Dems are up to their eyeballs in another banking catastrophe.
Oh, btw, people have this impression that Wall Street consists of Republicans. Virtually everyone high up in the investment banking community is a Democrat. The chairman, CEO of Lehman, chairman and CEO of AIG are Democrats. The same with Merrill Lynch. Even Hank Paulson from Goldman Sachs, while a Republican, is hardly a right winger. It's tough to find a conservative Republican anywhere there. That's one reason why Republican presidents have had such a hard time finding good candidates for Treasury Secretary that have a name on Wall Street. There aren't that many to choose from. They're about as rare as Republicans in Hollywood. Alan Greenspan, btw, is a Democrat, married to ultra-liberal Andrea Mitchell of NBC News.
Then again, my favorite Fed Chairman is a Democrat, Paul Volcker, so they're not all bad. Greenspan and Bernanke, the two who followed Volcker, were disasters.
Now on to policy.
On raising taxes and increased protectionism, does anyone remember what happened in 1929 after Wall Street had a meltdown? President Hoover raised taxes and increased protectionism by signing the Smoot-Hawley Act, two of the prime reasons the Great Depression came about. Hoover took a recession and made it the Great Depression as the double hit raised unemployment to a record 25%.
FDR failed to make much of a dent in the Great Depression with the New Deal as unemployment stayed at record highs and the economy stayed in the toilet for a decade. Most economists agree today that FDR prolonged the Great Depression with his policies and that it was World War II that brought us out of the Great Depression with near-universal employment as millions of men were drafted into the armed services and women were brought into the workforce for the first time out of necessity for the war effort, creating symbols like Rosie the Riveter.
Now it's 2008. We've had a banking catastrophe and Wall Street has had a meltdown. Obama proposes raising taxes and unilaterally redefining NAFTA and refusing to allow a free trade agreement with other nations in the western hemisphere, such as Colombia, all in the name of more protectionism. We've seen this act before. Recession + protectionism + higher taxes = Great Depression. We'll see how dynamic our economy is in warding off Obamanomics if he wins tomorrow since our economy is not the same as it was in 1929. Personally, I'd rather not see a repeat of the 1930's.
And on the issue of taxes, according to the latest IRS information, the top 50% pay 97.1% of all federal taxes while the lower 50% pay 2.9% while 40% pay zero income taxes. The percentage paid by the top 1%, 5%, 10%, and 50% have all doubled since the beginning of the Reagan Administration. Bush's tax cuts moved four million families off of the tax rolls making it even more progressive than before.
To get a perspective, the top 1% makes about 12% of the income. They pay about 35% of the taxes. The top 10% make about 25% of the income and pay about 60% of the taxes. The bottom 50% make about 25% of the income and pay 2.9% of the taxes.
The tax code is plenty progressive and doesn't need to be more progressive. Unfortunately, even when Republicans cut taxes, they make the tax code even more progressive. Ronald Reagan did it and so did George W. Bush.
As for Obama's tax plan, there aren't 95% of tax payers who can have their income taxes cut. So what's he going to do? He's going to increase tax credits, giving checks to people who don't pay taxes. That's called welfare, not a tax cut. There also aren't enough "rich" to pay for his $1 trillion in new spending. The only place to get that kind of money is from the middle class. It's no wonder the threshold for rich keeps dropping. Governor Bill Richardson and Joe Biden keep lowering that threshold.
I can already hear people saying, "but Ronald Reagan created the Earned Income Tax Credit that now pays people who don't pay taxes." Not true. Reagan did indeed create the EITC to help low-income families, all right. But his original EITC never gave people back money they didn't pay in. It was only later that the EITC began to pay people who didn't pay taxes.
Obama also plans to raise the capital gains taxes from its current 15% to 20% and 28%. That's a quick way to eliminate revenue. Just as an example of how tax cuts work, Bill Clinton cut the capital gains rate from 28% to 20% in 1997, which he signed because his pollster Dick Morris told him to do it. In one year, revenue from capital gains doubled from about $50 billion to $110 billion as capital was freed up and investments increased. According to Keynesians, that shouldn't be possible. That $50 billion should have fallen to $40 billion or less according to leftist theory.
Reagan had done the same thing with his tax cuts taking all income tax rates down from a maximum of 70% to 28%. Revenue in 1980 was $550 billion. By the end of the Reagan Administration, revenue topped $1 trillion.
As a perspective on how American companies are not very competitive in the world market, France has the highest capital gains taxes in Europe at 5%. American businesses pay 20%.
Clinton also recognized that his tax on yachts in 1993 meant to soak the rich didn't work the way he thought it would. Rich people stopped buying yachts and tens of thousands of workers were thrown out of work. The tax was abolished a few years later without fanfare, a tacit admission that raising taxes lowered revenue, in this case to zero, as an entire industry vanished and many people lost their jobs. Remember, J-O-B-S is a very important three-letter word, according to Joe Biden. He wants to raise taxes on employers so that people will have more jobs.
BTW, I'm still waiting on the Clinton middle class tax cut. I remember distinctly when Clinton campaigned on that, hitting President Bush (#41) for raising taxes. I also remembered that one month after his inauguration, Clinton abandoned his middle class tax cut and raised taxes by record amounts, retroactively, including regressive gasoline taxes and the boosting of the taxable level of Social Security benefits, hurting the elderly.
The only taxes he ever cut were capital gains, and that was because his pollster told him to sign the bill that the Republican Congress passed.
The most devastating of Obama's tax increase proposals will be the lifting of the Social Security tax ceiling, currently at $105,000 in income. That translates to an immediate 6.2% tax increase on top of what people already paid, but it becomes double for small businesses who file as S-Corps, Proprietorships, and Partnerships. They'll end up paying an additional 12.4%, an enormous tax increase on top of income tax increases, since they pay both the employer and employee portion. Can we say bye bye to J-O-B-S?
I should also remind people that the deficit had grown to over $400 billion in the aftermath of the dot com bust and 9/11. The Bush tax cuts reduced the deficit to $146 billion in fiscal year 2006, the last Republican budget. In 2007, with a Democratic Congress and Bush's budgets DOA, we have over a $450 billion deficit, more than double. Coincidence? Maybe, maybe not.
Now it's 2008. I've heard this story before. Whenever a Democrat promises a middle class tax cut, it's time to hide your money under the mattress since it never happens. You can probably count on a big tax increase coming your way. Oh I'm sure the EITC will be boosted, giving money to people who pay no taxes, but if you do pay any, I wouldn't hold your breath. The last time a Democrat cut anybody's income tax was in 1963 under supply-sider John F. Kennedy. They've all promised it, though. Somehow the follow-through never happens.
On the issue on the availability of abortion doctors, I read an article back in 2002 about the South Dakota Senate race and how abortion was an issue back then. It said that essentially the lack of demand made it non-viable for any abortion doctor to actually practice in the state. In red states where abortion is considered bad, there aren't that many clinics since not many people have them as compared to blue states. In South Dakota, there was a single doctor who came from a neighboring state (I forget which one) who was brought in once a month by Planned Parenthood.
So women who wanted to have an abortion either had to wait for the doctor to arrive and then drive a long distance to get to the doctor's office or they would have to drive to another state where there were many more doctors who would perform abortions.
I can't attest to the accuracy of the article, but it makes sense.
