Here's Another Prediction I Hope Is Wrong

Greetings from the Left Coast!

Last week, I heard Arthur Laffer interviewed on a national radio program. Laffer is a pretty bright guy who, by the way, supported President Bill Clinton in 1992 and 1996 because of Clinton's conservative fiscal policies. He's the guy who reportedly drew the "Laffer Curve" on the back of a cocktail napkin during a 1974 meeting with Dick Cheney and Donald Rumsfeld. The Laffer Curve basically states that at a 0% tax rate, and at a 100% tax rate, tax revenues would be zero. Therefore, somewhere between those two extremes is a point where tax revenues are maximized. Therefore, raising tax rates beyond that point will actually reduce revenues, and if rates are beyond that point, lowering them will actually increase revenues.

This absolutely worked during the Reagan administration, despite what you may have been told. Every time in modern history that federal taxes have been reduced, federal tax revenue has actually increased. The problem is that Congress is congenitally unable to stop itself from spending more money than it has - so even though tax revenue went up, spending went up even more, and debt increased. But I digress.

Back in June, Laffer wrote a column in the Wall Street Journal predicting what would happen if the "Bush Tax Cuts" were allowed to expire. This is now almost certain to happen, for reasons I'll explain later. Here are the salient points of Laffer's column:

• If people believe that taxes are going to be higher next year, they will attempt to shift production and income into this year if possible. This was demonstrated in the early 1990s when "high income taxpayers" shifted income into 1992 to avoid the expected increase in the top tax rate in 1993, then again at the end of 1993 to avoid the increase in Medicare taxes that went into effect in 1994.
• It is entirely likely that at least part of the reason that the economy is looking as good as it is in 2010 is because that's already happening.
• "When we pass the tax boundary of Jan. 1, 2011, my best guess is that the train goes off the tracks and we get our worst nightmare of a severe 'double dip' recession."

Laffer's estimate is that if the Bush tax cuts expire, Americans will see an average 3% tax increase. If you take away an additional 3% of people's disposable income through added taxation, it's logical to conclude that spending will drop by at least that 3%. Since the economy is currently growing at less than a 3% annual rate, if spending drops by 3% next year, we're back in recession - and that doesn't even take into account the effect the higher tax rates will have on investment and job growth.

The Democrats already chose to kick the ball down the road, and recess for their last-ditch campaign efforts without passing a tax cut extension. It probably won't get any better when they reconvene after the election, either, and here's why.

Even if the Republicans do see a sweeping victory on election day, they won't take office until next year. So the "lame duck" Congress that reconvenes after the election will be the same Congress that we have today. And here's what the math looks like. Nancy Pelosi already has in her hands a letter from 31 Democrats saying that the tax cuts should be extended for all Americans. So, although Pelosi is committed to extending the tax cuts only for the middle class, and allowing the "tax cuts for the rich" to expire, she may not have the votes to pass such a bill. So here is Laffer's prediction of what she'll do:

House rules allow her to bring a bill to the floor under "suspension" of debate, meaning that an immediate up or down vote must be held on the bill, without any debate taking place. However, such a bill requires a 2/3 majority for passage, which the Speaker does not have. So she will bring to the floor, under "suspension," a bill that extends the tax cuts only for the middle class, knowing she doesn't have the votes to pass it. Then, when it fails to pass, she will immediately blame the Republicans for voting against tax relief for the middle class. And if the economy does go off the rails next year, as Laffer predicts, she will blame the Republicans for that, too.

You see, for the Democrat leadership, it's all about their power. They were perfectly willing to see America lose the war in Iraq and come home in disgrace, as long as they could blame the Republicans for it. (Remember Harry Reid's "This war is lost?" And Obama's comment after he took office and saw that the surge was clearly working that, even knowing what he knew now, he would still have opposed it?) And they're perfectly willing to see the economy go off the rails, no matter how many Americans are hurt, as long as they can blame Republicans for it.

Thanks for listening.

Liberal Myth Number...Oh, Heck, I Lost Count...

Greetings from the Left Coast!

One of the many liberal talking points that just won't die is how our economic problems and ballooning deficit are due to all the spending on those "illegal" wars in Iraq and Afghanistan. I recently had the following comment exchange with one of my Liberal Facebook Friends ("LFF"):

ME: (...Facebook status update grumping about references to the "cost" of tax cuts, as though our tax money was something the government is entitled to, and it's some kind of sacrifice for them to take less of it...)

LFF: "I think they want the top 2% to start paying their part so we can get out of debt or something like that."

ME: "I think if you run the numbers, you'll find that you could tax the top 2% at a 100% tax rate and we still couldn't get out of debt at the current level of spending. But that's another issue - I was objecting to the use of the word 'cost' in the context of a tax cut."

LFF: "Good point.... Sadly. I hate to think how long it will take to pay off these wars and all the bailouts. None of which have done any good for the [people] of America."

ME: "According to the Congressional Research Service, the cumulative cost of the War On Terror, from 9/11 through the FY2010 defense appropriation, is approximately $1 Trillion. That includes all of the costs of the Iraq and Afghanistan operations. This year's budget deficit alone is more than that. So it ain't the wars that are causing all the budget problems. (See http://www.fas.org/sgp/crs/natsec/RL33110.pdf)"

LFF: ...(recap of how government debt grew from 2000 - 2007...) "Increased spending was needed last year to boost the economy out of recession. There are plenty facts to support that this is working. To ensure the economy did not falter, spending has continued this year. So by 2011, deficit spending should be reduced. The most recent budget forecast from the Office of Management and Budget (OMB) showed the budget deficit at $1.3 trillion in FY 2011, more than the $1.17 trillion deficit for FY 2010, but down from the $1.7 trillion deficit for FY 2009."

LFF: "By the way… Babyboomers paid extra into Social Security to ensure there would be enough funds to support our retirement. Well it’s all gone and do you know what it was spent on? Yep. the stupid, winless wars all about greed."(...more stuff on the Social Security mess...)

ME: "I think you're making my point for me. The single-year budget deficits in FY2009, FY2010, and projected deficit for 2011, are all greater than the total amount spent on Iraq and Afghanistan in the last nine years. The War On Terror represents only a small part of the spending problem."

LFF: (Silence)

Now you, gentle reader, have no doubt spotted a number of other points in LFF's comments that could have been challenged:

• Reference to the top 2% "paying their part." For the love of God, the top 1% of income earners already pay nearly 40% of all income taxes collected, and the top 5% pay over 50%, while 47% of households pay no income tax at all. How much do they have to pay before they're "paying their part?"
• The comment that none of the wars and bailouts have done any good. I'm tempted to agree on the bailouts, but the wars haven't done any good for the people of America? That comment alone is worth several blog posts.
• The comment that increased spending was needed last year to boost us out of recession. Really? Can I see a show of hands of all of you who feel boosted out of the recession?
• There are plenty of facts to support that this is working? Care to share any of them?
• By 2011, deficit spending should be reduced. Yes, I believe it will be, but only because so many Democrats are going to be kicked out of office in November.
• The "stupid winless wars" were all about greed. That's odd, because I thought they were all about terrorist attacks on American soil that killed thousands of our fellow citizens.

And that, gentle reader, illustrates one of the biggest challenges of talking to your liberal friends: it's difficult to stick to one subject, because so many fallacies get dumped on you so quickly that your first reaction is to just walk away shaking your head and wondering what universe they've been living in for the last several years. Be patient with them, and try to stick with whatever the original point was without getting sidetracked. If that doesn't work, you can always walk away shaking your head.

Thanks for listening.

And They Call Themselves Christians...

Greetings from the Left Coast!

I have several Facebook Friends who are, shall we say, quite a ways to the left side of the political spectrum. Wonderful people otherwise, but definitely part of the group for which the Left Coast is named. On several occasions, I've seen conservative political views criticized as lacking basic human compassion, and heard some variation of, "And they call themselves Christians? What must Jesus be thinking now?" This has always bothered me at a visceral level, but it took me a while to figure out exactly why:

Jesus taught that we should care for the needy personally. He never taught that we should turn that job over to government and let government do it for us. I believe there are two good reasons why personal involvement is better than government involvement.

First, Jesus never taught that anyone should be forced to care for the needy. There is no spiritual benefit in doing the right thing because you are forced to do it. That, in fact, is the essence of the doctrine of human "agency" - that we are free to choose to do what God asks of us, or not to do so. But when the government forcibly takes money from someone (which, after all, is what taxation fundamentally amounts to), even for the best of causes, that person's agency had nothing to do with it. Left to his or her own devices, that person might or might not have chosen to give to the cause in question...but it's a moot point. That person won't get the opportunity to make that moral judgment, for better or for worse.

Second, and this is possibly more subtle, by shifting the responsibility to the government, we don't have to take any responsibility ourselves. We don't have to personally face the poor, the orphan, the widow, the sick, the dying. We can, in fact, ignore them and go on with our lives, because, after all, there's a government program to take care of them.

So I submit that it is not at all a violation of Christian principles to want to place limits on government-imposed income redistribution and the creeping expansion of the "Nanny State." And I find it interesting that conservatives, who tend to want those limits, are, statistically, more charitable personally than liberals. Conservative families give more than liberal families, across the board, in every income bracket. Republicans, statistically, are more charitable than Democrats. "Red" states are more charitable than "blue" states. The residents there volunteer more, both for religious and secular causes. They're even more likely to donate blood.

Does that mean that we should remove all government safety nets? No, not at all. But if I had to judge which philosophy was more consistent with the teachings of Jesus - to say, "We need to raise taxes so we can fund another government program," or to say, "No, it's not the government's job to do this, it's my job, and I'll put my money where my mouth is!" - I would have to say it's the latter.

Thanks for listening.

A Reality Check (and a Little Civics Lesson)

Greetings from the Left Coast! The 2008 Presidential campaign is heating up, and, to no one's surprise, every candidate is going on record as the candidate for "change." That's what we all want, right? If as many people as the pollsters claim believe that the country is headed in the wrong direction, then of course we would want change! And of course all of the candidates will tell us what we want to hear.

But just how much change can a President actually cause? No matter whom he or she may be? What, in fact, can a President do? Well, that's fairly clearly defined in this thing called the Constitution of the United States. According to Article Two, here's what a President can do:

• He or she is the Commander in Chief of the nation's military forces. That means that once Congress authorizes military action, the President gets to make the decision of how the troops get deployed. The Founding Fathers knew that you can't run a war by committee. Someone must have the ultimate decision-making responsibility. That someone is the President.
• He or she "may require the Opinion, in writing, of the principal Officer in each of the executive Departments, upon any subject relating to the Duties of their respective Offices." This phrase contains the seeds of what has become the "Cabinet," made up of the heads of the various departments that compose the Executive Branch of government.
• He or she may grant pardons and reprieves, except in cases of impeachment.
• He or she may make treaties, provided that two-thirds of the Senate ratifies them.
• He or she "shall nominate, and by and with the Advice and Consent of the Senate, shall appoint Ambassadors, other public Ministers and Consuls, Judges of the Supreme Court, and all other Officers of the United States, whose Appointments are not herein otherwise provided for, and which shall be established by Law..." (The article goes on to say that Congress may determine by law whether certain other appointments are made by the President, by courts of law, or by "Heads of Departments.")
• He or she has the power to make appointments to fill vacancies "that may happen during the Recess of the Senate," but these appointments expire at the end of the Senate's next session, unless the Senate votes to confirm them permanently.
• He or she "shall from time to time give to the Congress Information of the State of the Union, and recommend to their Consideration such Measures as he shall judge necessary and expedient."
• He or she may call special sessions of either or both Houses of Congress when necessary.
• He or she "shall receive Ambassadors and other public Ministers."
• He or she "shall take Care that the Laws be faithfully executed." (This is what takes up most of the time and effort of the Executive Branch.)
• He or she "shall Commission all the Officers of the United States."

That's it, folks. According to the Constitution, that's what the President gets to do. So keep that in mind when you're listening to campaign promises, such as:

Vote for me so we can end our dependence on foreign oil. Really? How is a sitting President going to do that? The Bush administration hasn't done it in the last seven years. And, guess what? The Clinton administration didn't do it in the eight years before that, either. (And if we have another Clinton administration, they won't do it either.) And it wasn't because it didn't need to be done - it was because the President can't do it. The President only gets to execute the laws that Congress passes, and no President in recent memory has ever gotten things entirely his own way...not even when his own party controlled Congress.

There are only two ways to end our dependence on foreign oil. Either increase our domestic supplies, or reduce demand. But we can't easily increase our domestic supplies, because environmental interest groups have managed to block every attempt at new drilling, or new refineries (we haven't built a new refinery in 30 years, which is why prices ratchet up every time one shuts down for maintenance). And how, exactly, would you suggest that we reduce demand? Increased mileage standards are a mere drop in the barrel. Let's see a show of hands from everyone who wants to see additional taxes of a buck or two a gallon so we can depress demand for gasoline by artificially raising the price. Anybody? How about some windfall profit taxes on the oil companies? Boy, that'll show them! But will it produce one extra drop of oil?

The best way to end our dependence on foreign oil is to let the free market do it. We're actually fortunate that the recent run-up in oil prices has happened at a time when the economy was so strong that we've been able to absorb it without having the economy go completely into the toilet. Do you realize just how remarkable that is? And does George Bush get any credit for the resilience the economy has shown? Of course not. But the higher prices go, the more price competitive alternate sources of energy become: biofuels, fuel cells, gas/electric hybrids - and the more affordable it becomes to use more expensive extraction methods to get oil from shale deposits, tar sands, and existing wells where all the oil that could be easily extracted has already been extracted. Market forces will work if they're allowed to - and I'd rather bet on them than bet on the government to solve the problem.

How about "climate change?" (This is the new term for what used to be called "global warming," now that the evidence is mounting that "global warming," at least of the man-made variety, is a gigantic hoax.) Both Barak Obama and Hillary Clinton support the Kyoto Treaty...but back when Bill was President, the Senate (that would be the Democrat-controlled Senate) voted 98 - 0 to reject it. See, it costs the candidates nothing to tell you they support that treaty - because they know that there aren't enough Senators who are willing to commit economic suicide to ratify it.

Fiscal responsibility? Well, the President gets to submit a budget to Congress, but Congress then immediately gets to start stuffing it full of pork. Remember how the Democrats promised to eliminate "earmarks" if only we'd give them control of the House in 2006? Guess how that worked out? According to a December, 2007, article in USA Today, all 49 new Democrat legislators sponsored or co-sponsored at least one earmark. According to the article, "Freshmen Democrats were the sole sponsors on projects worth $351 million." Republicans, by contrast, only got $65 million approved. Those Democrat reformers are responsible for six times as much pork as the Republicans they criticized. What the Democrats have done is make more of an effort to hide what they're doing: rather than inserting earmarks into legislation as it's being written, they've decided to allow them to be inserted into conference reports, which are not publicly negotiated, and which cannot be further amended when they reach the House or Senate floor for a vote. I guess this is a new definition of reform that I wasn't previously familiar with.

And remember, the President doesn't have the "line-item veto" power that many state governors have. He or she can't just strike out offending portions of appropriations bills - it's a take it or leave it situation, which is why defense appropriations bills are such rich targets for the insertion of non-defense-related earmarks. (E.g., $24 million for sugar beets, and $40 million for something called the "Tree Assistance Program," inserted into the Iraq funding bill last spring.) And the Supreme Court has held that, in general, the President can't refuse to spend what Congress has appropriated, either, because that would amount to a de facto line-item veto, which is unconstitutional.

How about reforming the Income Tax code? Moving to a "flat tax" or a "fair tax?" Believe me, I'd love to see that happen, but, again, the President can't just do it. According to that pesky old Constitution, Congress - specifically the House of Representatives - gets to write the tax laws. The President can ask Congress to do what he or she wants, but can't make them do it.

The Founding Fathers were amazingly smart in how they designed this government. Congress is composed of two Houses. The House of Representatives is, by intent, the voice of the people. Its members are apportioned according to population, with the more populous states getting more seats in the House. And every seat in the House is up for grabs every two years, so it responds very quickly to the desires of the people - if the Representatives aren't doing what the people want, the makeup of the House can be changed very quickly. The Senate, on the other hand, is the voice of caution, tradition, and deliberation. Every state gets two Senators, regardless of how large or small it may be. Senators are elected for six-year terms, and only one-third of the seats are up for grabs in any given two-year election cycle. In fact, until the Seventeenth Amendment was ratified in 1913, Senators weren't even elected directly by the people - they were appointed by the legislators of their respectives states. The Senate is, by intent, the voice of continuity, the counterweight to the potential volatility of the House, the voice that says, "Wait a minute, let's think this over first."

The need for compromise was deliberately built into our system of government by its architects. No one branch of government, no one person, no one President can deliver on most of the things you're going to hear about this campaign season. So what should you be voting on? I'd suggest that we should choose a Commander in Chief that would be an effective leader of, and would command the respect of, our nation's military. Someone whose foreign policy you trust, seeing as how they do get to appoint ambassadors and tell them what to say. Someone who has proven his or her ability to manage large budgets effectively, since the President is responsible for spending (and managing) the money that Congress appropriates. Someone who has the ability to inspire others to follow him or her, since the promised changes aren't going to be things that can just be rammed down Congress' collective throat.

But, please, don't believe everything you hear. And thanks for listening.