BeyondStageOnePolitics.com
“Our practical choice is not between a tax-cut deficit and budgetary surplus. It is between two kinds of deficits: a chronic deficit of inertia, as the unwanted result of inadequate revenues and a restricted economy; or a temporary deficit of transition, resulting from a tax cut designed to boost the economy, increase tax revenues, and achieve . . . a budget surplus.” John F. Kennedy

Voice-over

My recent political voice-over demo. See Contact for manager's information.

Audio clip: Adobe Flash Player (version 9 or above) is required to play this audio clip. Download the latest version here. You also need to have JavaScript enabled in your browser.

Aug 21 2013

Detroit and Blue State America

Carolyn

As a country, we’ve seen the city of Detroit pushed into bankruptcy as a result of over half a century of municipal mismanagement and corruption, the largest municipal bankruptcy in US history, at $18-20 billion. At one time it stood as the richest city, per capita, in the US, as well as the fourth largest in terms of population.

What we’ve seen over the decades since Detroit’s economic and population height is a long, sustained flight of capital. Individuals and businesses have made the rational choice to invest in cities and towns where business growth is encouraged through contractual freedom (right-to-work), low taxation and decreased regulation. When the entrepreneurs and businesses that can easily leave, do, what remains is a static workforce made up of mostly union workers and government employees, or rather taxpayer-subsidized union employees.

From December 2010:

The Census Bureau announced today that eight states will gain at least one Congressional seat. Texas will gain four seats and Florida will gain two. Arizona, Georgia, Nevada, South Carolina, Utah and Washington will gain one seat each. The biggest losers will be New York and Ohio – both will lose two seats – while Illinois, Iowa, Louisiana, Massachusetts, Michigan, Missouri, New Jersey, and Pennsylvania will lose one seat each.

The average top personal income tax rate among gainers is 116 percent lower than among losers. The total state and local tax burden is nearly one-third lower, as is per capita government spending. In eight of ten losers, workers can be forced to join a union as a condition of employment. In 7 of the 8 gainers, workers are given a choice whether to join or contribute financially to a union.

Detroit’s bankruptcy was preceeded by sixty years of rising taxes, generous government pension promises and a shrinking tax base. Additionally, non-government unions forced much of the industry in Detroit into a position where it was advantageous to build plants oversees in order to avoid unsustainable costs.

Most of those who had the means to leave, did. Of those who have chosen to stay, fewer than half (49.8 percent) are either working or looking for work, the lowest rate among major US cities.

Detroit also has far more city employees per resident than do most other similar sized cities and, for those making $50,000 or more, the 4th largest tax burden among the largest US cities. In fact, those taxes are going to pay for things such as $56,000 for a horseshoer in the Detroit Water & Sewer Department, despite the fact that it has been years since horses were used by the city. Not surprisingly, Wayne County has 520,000 citizens receiving food stamps, over 25 percent of its citizenry, presumably with most of those located within the city of just under 707,000.

Dynamism and entrepreneurship have virtually disappeared while government jobs, dying industry and welfare have remained. When those with the imagination and drive to create new jobs and new industries leave in search of more favorable conditions for taking risk, the jobs of the future follow them.

Detroit is left with the jobs and industries of the past, propped up by federal investment and municipal credit that is now wiped out.

Can anyone please explain how the present in Detroit (and Bell, CA and San Bernardino, CA and Stockton, CA and Jefferson County, AL, . . .) is any different from the future of all the cities and states which continue to follow the very policies that destroyed America’s once-great motor city?


Dec 10 2012

“The Age of the Unserious”

C.M. Phippen

Our president claims that he is making an honest effort to negotiate with Republicans to avoid the fiscal cliff. He wants us to believe that they are the ones who simply won’t budge on their positions and won’t allow him to fix the horrific fiscal issues we face.

This is the president whom Tim Geithner claims is willing to go off the fiscal cliff if the Republicans don’t agree to his plan to raise taxes on the richest 2% because, in Geithner’s words, “remember, it’s only the top two percent.” Doesn’t unequal treatment under the law become a civil rights issue at some point!? Anyway . . .

This is the same president who has had his past two budgets shot down in Senate votes of 99-0 and 97-0, one of which looked an awful lot like Obama’s current proposal from which he is negotiating. He apparently expects Republicans to support the plan that his Democrat allies in the Senate refused to support?

In addition to major entitlement spending cuts, the greatest priority our government should have is that of allowing/encouraging/stimulating economic growth, which will in and of itself lead to the President’s desired revenue increases.

In fact, Bill Whittle recently made the point that “if you destroyed the entire government, burned every [public] building, fired every government worker, sank every aircraft carrier, even with no government to pay for – none – we’d still pay the same taxes that we’re paying today and still have to borrow or print money just to pay for entitlements.”

I would argue that if we do indeed have a shortage of money for schools, teachers, police and other government services, it is entitlement spending that is draining those resources, not tax cuts or wars.

Even Austin Goolsbee, former president of Obama’s Council on Economic Advisers, recently stated that any solution to America’s economic ills “cuts on discretionary and entitlement spending.”

In addition, Peter Orszag, former OMB director, recently came out urging his fellow Democrats to support reforming entitlements and putting “crucial programs on a sounder footing.”

I must assume that our president is well aware of the fact that nothing in his rejected budget plans or spending priorities will stimulate growth. And he has made it very clear that, despite his repeated declarations to the contrary, he is never going to cut any real spending.

Thus, his only plan to decrease the rate of growth of our historically unprecedented federal deficit seems to be an increase in revenue coming from the already over-burdened taxpayer. Unfortunately, the proposal on which he is willing to risk our entire economy, that of increased taxes on the top 2%, leads to enough revenue to cover expenses for about eight days! Brilliant!

Even the Obama-touted Buffet Rule, if implemented, would pay for about 28 hours of government spending. If you want to close the deficit through increased taxes on the two highest tax brackets – 33% ($178,650 – $388,350) and 35% (over $388,350) – it would be necessary to hike those rates to 159% and 166% respectively. I’m assuming most liberals would tell us that such rates would have absolutely no impact on economic growth or the willingness of those individuals to work!

AEI economists recently looked at the effect of tax increases v. entitlement reforms on fiscal crises management over the nearly three-decade period of 1970-2007. They found that countries that were able to successfully reform did so mainly with spending cuts; in fact, on average 85% of their budget gaps were closed this way. On the other hand, those with failed reforms were the countries that, on average, relied at least 50% on tax increases.

Just ask Jim Sinegal, co-founder of Costco, if those tax increases will most likely lead to greater or reduced revenue next year. He’s a supporter of Obama who preached the moral imperative of Obama’s tax plan, and of businesses large and small all “following the same set of rules . . .” while risking Costco’s credit rating to take on an additional $3.5 billion in debt in order to pay out dividends this year before Obama’s tax hikes kick in. Oh, and he is apparently the biggest beneficiary of this move.

Or ask Great Britain how a plan of tax increases worked for them last year when they raised rates on those making over £1 million (about $1.6 million) to 50%. The result was that they saw a £7 billion treasury loss as nearly two-thirds of the high earners were suddenly missing from the country or finding ways to shelter income.

Funny though, that even after the manifestation of the result of such policies, political supporters of the increased tax are now calling any reduction a “tax cut for millionaires,” as though resentment toward the wealthy is more important than the amount of money the government actually has for programs which benefit the less well-off.

Yes, Mr. Whittle, I think you’re right; this truly is “The Age of the Unserious.”


Nov 16 2012

Obama and the “Balanced Approach”

C.M. Phippen

Within days of his razor thin re-election, President Obama chose to inform us that he now has a mandate for his deficit reduction policies that include a “balanced approach.” In this case, balanced means he wants the wealthy to pay for the overspending of politicians in Washington; if the rich will just pay more, then the politicians will find the discipline to reduce their overspending by a tiny fraction.

Never mind that it wasn’t a “balanced approach” of irresponsibility that got us here – it was fully a result of Washington not living within its means. The increase in revenue from those taxpayers would amount to $82.3 billion annually, the equivalent of about eight days of spending.

According to a recent study by Ernst & Young, just allowing tax rates to go up on those making over $250,000 a year could cause a loss over the long-term of 700,000 jobs.

Are we really willing to exchange eight days of spending for 700,000 jobs in an economy that is barely making it? Does this make sense to anyone who’s not a community organizer?

Our economy needs to grow at about a 3 percent annual rate in order to just keep up with new workers entering the work force; under Obama we’ve experienced a GDP growth rate average of about 2 percent.

Even Thinkprogress.org, while denying that these increased tax rates will have any real effect on economic prosperity, has admitted that the US economy would take a .25 percent hit in growth if these taxes increase. Even if that is the worst of the economic consequences from such a policy of anything but “equal protection under the law,” are we really willing to take a 1/4 percent hit year after year just to cover eight days of expenses during each of those years, especially when the record under this president has been growth below what is necessary just to keep the currently high rates of unemployment stable?

Interestingly enough, when looking at the exit polling done on election day, only 33 percent of voters said they think taxes should be raised to deal with the deficit. A full 63 percent of voters responded “No” to the question of whether or not taxes ought to be raised to help cut the budget deficit.

Of course, no surprise that many of the people who probably voted for Obama were completely unaware of his plans. That would be because he didn’t run on his plans. He ran on demonizing Mitt Romney for being successful and rich, as evidenced by his 85.5 percent of negative ads in this campaign; ads that were mainly aimed at Romney personally rather than being aimed at his actions and principles, by the way. Translation – nearly all of his sizeable war chest was spent demonizing the most successful guy in the room.

There’s no better time in America to be a loser – we love the guy whose every promised outcome was a flop and who, at every turn, had an excuse handy as to why he just couldn’t accomplish what he wanted and why it was everyone’s fault but his own. The reason the stimulus didn’t work, according to the Obama administration, was that the recession was much worse than they’d realized; turns out it wasn’t as bad as we thought – 4.7 percent decline rather than 5.7 percent.

He truly is the president of the participation trophy generation. I guess though, that if the successful aren’t responsible for building their own success, it follows that the losers aren’t responsible for their own failures.


Jul 24 2012

Stimulus and Economic Growth?

C.M. Phippen

According to a recent interview with Larry Kudlow, Alan Greenspan admitted that, much to his surprise, the economic stimulus had a negative effect on the economy. The data showed that not only had it not been stimulative, it was actually detrimental to economic growth. Our government spent nearly $1 trillion and it not only did nothing to “stimulate” growth, it actually hindered it.

That makes sense, based on a little statement by Jared Bernstein a couple of years ago. I wrote about it at the time. Bernstein was the chief economic advisor to Vice President Joe Biden and he stated that the consensus among economists was that unemployment would not rise above 8 percent. This consensus ostensibly existed independent of any plans by the administration to pass a stimulus bill that amounted to nearly $1 trillion of borrowed money, as it existed in the fall of 2008 and prior to Obama entering the White House. Apparently the administration was as surprised as Alan Greenspan to find that the stimulus did precisely opposite what our president told us it would do.

One could expect any open-minded, non-idealogical leader to learn from the events of the past few years and change course; reconsider the policies that have stunted economic growth and harmed millions of Americans.

When asked recently by a reporter why President Obama hadn’t met with his jobs council in over six months, Jay Carney’s response was that the President “has a lot on his plate.” Of course, he has attended over 100 fundraisers and is a prolific golfer and entertainer of celebrities.

But back to the economic reality that the rest of the country must face every day, a recent study by Ernst & Young claims that we will experience a loss of over 700,000 jobs if the Bush tax cuts are not extended for upper income earners. If legislation extending those tax cuts for upper earners crosses his desk, Obama apparently will veto it.

On a number of occasions, when confronted with the evidence that raising certain tax rates reduces federal revenue and cutting those rates increases revenue, Obama’s response has been that he would still raise taxes on the rich for reasons of “fairness.” One must assume he just isn’t interested in the effect of such policies on the broader economy.

Then there’s Sen. Patty Murray’s recent comment that if the Republicans won’t cave to the Democrats by helping them to pass legislation that would exempt top earners from an extension of the Bush tax cuts (remember, costing our economy an additional 700,000 jobs) then the Democrats should allow all of the tax cuts to expire. According to Citigroup, if this were to happen we could expect a 4 percent hit to growth in 2013. Even if Congress extends the “middle-class” income tax cuts and allows all others to expire, we can expect a 2.9 percent decline in growth.

This in an economy that has only been growing at around 1.7 percent for the past two years. Either of these options would most likely swiftly throw us back into recession. But of course in this political machination (most likely non-idealogical), I’m sure Pres. Obama and Sen. Murray are only looking out for the middle class and poor, who actually need a job to get by.

Then there’s this remark from Alan Greenspan in the same interview, where he said that the largest problem with our debt (the Peter G. Peterson Foundation has been telling us this for a very long time) is entitlements, specifically Medicare. The solution to the debt problem for this administration was to add to our entitlements, specifically health care, in such a way that anybody who is capable of performing simple mathematical functions is completely aware will cost us multiple trillions of dollars every decade and most likely many times that.

I’m just wondering, after this administration has, through it’s policies of fairness, pushed more working-class Americans out of jobs, decimating the income of the average consumer as well as wiping out much of the tax base, who’s going to be left to pay for it all?


Sep 20 2010

Tax Cuts for the Rich?

I received this email from Paul Day and felt like it was worth publishing:

Remember how we have heard from the Democrats for the last 8 years that the ‘Bush’ tax cuts were tax cuts for the ‘rich’? Now we have our (Democratic) president proposing to extend the ‘Bush’ tax cuts for people earning less that $250,000. But I thought they were for the ‘rich’. It turns out that extending the tax cuts for those earning over $250,000 will ‘cost’ $700 billion over 10 years while extending them for those earning less than $250,000 will cost $2.3 TRILLION. In other words, more than three quarters of what the Democrats all this time have been calling the ‘Bush tax cuts for the rich’ didn’t go to the rich at all. Oh, and the reason given for not extending the cuts for the upper income earners is that they are concerned about the loss of $700 billion – but apparently not concerned about the loss of the $2.3 trillion! Do you think the Democrats knew the truth all this time?


Jul 27 2010

Jobs and Tax Cuts

C.M. Phippen

As earnings reports come out, several companies are beating expectations, not only in bottom-line profits but also in sales. While corporations have had to cut back and trim down in order to pull back on expenditures, many are finally starting to experience some real growth.

Why, then, are they still not hiring? Last week I wrote about the fact that the political environment seems to be less than reassuring for business expansion and hiring. A comment was made by a reader that corporate tax rates are lower now than they were under Ronald Reagan, and I can only assume he was alluding to his belief that the current rates ought to then be good enough to do the trick.

The solution, though, seems to be all about the trajectory, and confidence in the political class going forward. Sir Martin Sowell, Chief Executive Officer of WPP, when asked by Larry Kudlow yesterday how the US can become a “re-emerging” market (in other words, attractive to investors as are the BRIC nations currently), his response was that the US must deal with our upcoming tax increases set for 2011 and our deficit, looking not at increasing taxes, but rather “looking at government spending.”

In a paper written by Christina and David Romer in 2008, they come to the conclusion that “a tax increase of 1% of GDP reduces output over the next three years by nearly 3%.” Christina Romer is the chief economic advisor to President Obama.

Why then, would this Congress allow the Bush tax cuts to expire at the end of this year, and why would the administration not support across-the-board tax cuts? According to Larry Kudlow, when Bill Clinton decreased the capital gains tax rate from 28% to 20%, revenue increased by $80 billion, and when George W. Bush reduced the rate even further, to 15%, revenues went up $85 billion. Couple that with the fact that Obama’s own chief economic advisor recently came to the conclusion that “tax increases have a large negative effect on investment.”

Timothy Geithner has recently stated that the White House would like to see tax rates for the top 2-3% of Americans increase in order to demonstrate to the world our commitment to dealing with our trillion dollar deficit. Heaven forbid we actually cut spending and allow private business expansion through reductions in taxes not only for corporations, but also for top earners. This encourages investors to invest, which thus encourages businesses to expand and ultimately hire more workers.

Is that really so difficult?