Let the Bush Tax Cuts Expire

I'm not for raising income tax rates.  I'm almost never for raising any taxes.  If a government entity really doesn't have enough money, and they can't raise enough money with bake sales to build their bombs, roads, sewers, or schools, then maybe, but that instance is so rare that it's not really worth discussing. 

Besides that, letting the Bush tax cuts expire is counterproductive.  Raising taxes on just the rich from 35% to 39.6% would increase revenue little, if any.  The wealthy have the most elastic wages of all income groups.  If you raise taxes on someone living paycheck-to-paycheck, you can get more revenue, because not only will they have to pay the taxes, they will have to work more to make up the lost income.  The wealthy are much more likely to be in a position to choose whether or to absorb the hit, increase their income (through working more or whatever) to make up for it, or reduce their income due to the reduced incentive.  A 4.6% tax increase wouldn't reduce incentives for very many wealthy people, but the marginal ones might make a difference in this recession.

All that being said, the Republicans in Congress should let Bush tax cuts expire.  Basically, the agreement has been to extend the Bush tax cuts by two years, spend a lot of Federal dollars on stimulus measures that the President has wanted for some time, and add enough pork to buy off enough Democratic Congresscritters to get it passed.  This isn't a good deal.  Republican voters should demand more.  Sure, taxes will go up January 1, but if the newly-elected Republican House gets on it and passes a better tax bill immediately, workers might only see the taxes for one paycheck.  If only there were a ready-made tax plan that reduced rates for almost everyone, would have a stimulative effect on the economy, and reduced the deficit...

... Oh yeah, the plan from the President's Debt Commission.  In a rare fit of sanity, the White House appointed a debt commission that ended up recommending a flatter income tax system with tax brackets of 9%, 15%, and 24%, and a corporate income tax rate reduced from an insane 35% to a still uncompetitive, but less onerous 24%.  It'll increase revenue by including capital gains as income, and significantly reducing the number of deductions, but almost every taxpayer will end up taking home more.  Also, it would greatly simplify tax returns.  What's not to like?  It has the backing of a bipartisan group from Tom Coburn to Dick Durbin, and the President even supports it.  (My guess is only because he commissioned it, but I don't know.)  House Republicans should be able to pass it as a package with an up-or-down vote, with no pork, and while the Senate may need to buy off some votes with pork, it won't be the crapfest that the Bush tax cut extension has become.  Let's see if Republicans have learned their lesson.

How the new Republican Congress can work with President Obama

Wednesday morning, we will wake up to a House of Representatives and potentially a Senate taken over by Republicans.  Republicans have opposed all of the unpopular programs that President Obama has promoted and will be rewarded by the American people.  Democrats and the liberal talking point repeaters have reminded everyone that will listen over and over that opposition to unpopular programs is not governing, and a Republican-majority Congress will have to govern.  They're right.  But it should be noted that the American people are not sending this new Congress to add Federal programs and laws and regulations, they're sending them to cut the Federal government and repeal laws and regulations.  This election is a mandate to increase freedom.  But with divided government, to make those cuts and repeal those laws and regulations, it will take bipartisanship.  Speaker Boehner (or whoever) will have to work with President Obama, Democrats in the Senate (even if Republicans do take back the Senate, it will be narrow), and probably some House Democrats.  To get this started on the right foot, I have a simple proposal:  Make the cuts that the Democrats ask for first.  Go to the President, and Democrats in Congress, and ask for a list of government programs and bureaucracies to cut (whole or partial), and laws and regulations to repeal.  Everything should be on the table.  Make those cuts first.  This won't be enough, but it will be a start, and a start on the right foot.  If Republicans let Democrats take some credit for the low-hanging fruit cuts, they should be more willing to work with Republicans when the cuts get harder.  The current fiscal and economic mess is a hole that was dug in a bipartisan fashion.  We'll need bipartisanship to get out of it.

What President Obama Should Do With the Nobel Prize Money

As many could probably predict, I disagree with Obama's Nobel Peace Prize. Obama has slightly reduced military action in Iraq, and has started the process to close the prisons in Guantanamo Bay, but he has dramatically escalated the Afghanistan War, spread it into Pakistan, expanded the ability of the NSA to spy on American citizens, started major saber rattling with Iran, and supported a deposed would-be dictator in Honduras. I joked on Facebook that maybe it should be renamed the Nobel War Prize. Despite my unheard objections, the Nobel committee has given the Peace Prize to our warmongering President. That's water under the bridge. But since President Obama has promised to give the $1.4 million prize to charity, he could do something really meaningful with it. May I suggest he give it to one of the nominees that really deserved it. (A few here and here.) I would give it to either Handicap International and Cluster Munition Coalition, Denis Mukwege, or Sima Samar. By empowering one of these worthy causes, Obama would have done more for peace and human rights than anything he's done so far.

To be fair to President Obama, though, I don't think many politicians deserve the Nobel Peace Prize. Nelson Mandela deserved it for his efforts to end apartheid, but few others. For the most part, politicians create war and oppress individuals, and free people acting out of love improve the human condition. That should be acknowledged.

Obama's Speech to Student's Leaked

This is a Pitchfork and Musket Junta exclusive. Since the Junta have such a good relationship with President Obama's teleprompter, we occasionally get scoops. Here is the full text:

Good, um, afternoon, children of America. Thank you for, uh, letting me speak to you today. I'm going to talk to you about how you can be as successful as me, if you just work hard, have the right connections, and worm your way into the right, uh, elite circles. First things first: to all of you in public schools (which I would suppose would be all of you, since I can't imagine to many homeschoolers or private school kids wasting their time on this), get out now. Just like I had to do. Indonesian public school wasn't going to allow me to get where I wanted to be, so I moved back to Hawaii and enrolled in the best private school in the state. In the United States, with the politicized Department of Education that we have, you're at an even bigger disadvantage in public schools. Now, some of your parents don't have the money and are wondering how to pay for private school. Well, just get your, um, millionaire banker grandmother to twist some arms and get you a scholarship. It worked for me.

Some of you won't to listen to me, and will stay in those horrible public schools, but that's okay. Not everyone is cut out to be President or even a University of Chicago Law Professor or Community Organizer. We'll need you on welfare or in low-paying service jobs to help bully, I mean, influence voters.

While you are at your elite private school, make sure that you make all of the connections that you can. They will help you get into an elite liberal arts university, maybe even in the Ivy League. This is important, because to fully understand the direction of the country, you need to understand the evils of capitalism, and the best way to learn that is from the wealthiest communists in the world. Columbia and Harvard, and other important universities attract many great professors whose families have made so much money that they really understand the inequality that capitalism brings about, and who really want to tear down the opportunities for other people to have to suffer from having so much. Understanding the evils of capitalism will help you be a leader in this new America that we are trying to create. Make sure that you develop strong relationships with your most, um, radical professors, as these will help you succeed in Party politics in the future.

Now some of you are worrying how to pay for this elite education. Don't worry about that now. Just borrow the money from the Government, who will have the Fed print it out for you. If you learn well enough, you can move to Chicago, become a community organizer, do great work for the Party, and have someone else pay your student loans for you.

I thank you for your time, and, um, tell your parents that you need the healthcare bill to pass.

A Nuclear Armed World is a Polite World

President Obama has been making a lot of noise about nuclear nonproliferation lately. One of his visions, which he has held since he first moved to Hyde Park and his education by the great progressive thinkers began, is a nuclear-weapon-free world. This is a very dangerous vision. The greatest deterrent to war that the world has ever known is nuclear power. Before the development nuclear weapons, industrialization had grown the size of war beyond everything that the world had known up to that point. In the two world wars of the 20th Century, a total of 98 million people were killed. Larger, more mobile, and more long-range weapons made it much easier to create massive destruction on a very large scale. But at the end of World War 2, a game-changing weapon made its debut. The atomic bomb.

The atomic bomb, and later development of the hydrogen bomb, has raised the threat of assured-destruction of anyone who starts a major war against a nuclear power. With all due respect to my hero, Barry Goldwater, it is not "just another weapon". To this day, no nuclear power has ever attacked another nuclear power directly, despite some of them being enemies: United States - Soviet Union and Pakistan - India, specifically. There is always a threat of nuclear arms falling into the hands of a suicidal madman, and we should work to prevent that. But for most countries and world leaders, even crazy ones like Kim Jong-Il, the threat of mutually-assured destruction is enough to keep them from using nuclear weapons. Even with world-dictator visions, the threat of France destroying Berlin and Munich at the push of a couple of buttons would have given Hitler second thoughts. And conventional weapons have advanced to the point that a non-nuclear world war could be even more destructive today.

Now I'm not necessarily saying that the steps President Barack Obama have taken so far are wrong. Just because the United States needs nuclear weapons to prevent world war doesn't necessarily mean that we need 10,000 of them, or 2500 on trigger-alert. A country having an enormous nuclear arsenal is like an individual having a 50-gun personal arsenal. The increased safety beyond having enough weapons to protect yourself is almost nil, and might be outweighed by the marginally increased chance of accident. It might be possible to reduce the size of our nuclear arsenal significantly, and save some money in the process. He might even get to 5% of his desired $100,000,000 in savings by reducing the arsenal to some more reasonable size. It's just that his vision is dangerous, and would kill any eventual prospect of world peace.

Predicting a $2,000,000,000,000 Budget - Update

On January 7, I made what I thought then was a bold prediction, that the budget deficit for Fiscal Year 2009 would be $2 Trillion. Today, the CBO projects a $1.9 Trillion budget deficit for Fiscal Year 2009. Odds are that many more stimulus packages are on the way. I'd like to revise my prediction up to an immoral $2.5 Trillion. The words of Senator Tom Coburn are worth repeating: “The greatest moral issue of our time isn’t abortion, it’s robbing our next generation of opportunity. You’re going to save a child from being aborted so they can be born into a debtor’s prison?” However, my response to the Good Doctor is that at the rate we are going, we may not be able to afford to finance debtor's prisons. Federal bankruptcy is looking more and more likely every day.

Priming the Pump

Last night, President Obama gave his first press conference to make his case for the spending package. He did a pretty good job of demonizing the opposition, and painted a pretty bleak economic picture. First of all, I agreed with him on two points: 1) Republicans, specifically Bush, got us into this mess. 2) Alex Rodriguez using steroids is a black eye on Major League Baseball.

For his main point though, Obama's defense of using massive government spending for stimulus is based on junk science. I don't remember him using the analogy, but the typical one used for this kind of stimulus package is "priming the pump". His idea is that the government can spend a lot of money on projects for a while, and that will create confidence, spark consumption, and at some point, spark private investment will create more long-term jobs. It's an idea right out of Lord Keynes' General Theory. The problem is that the theory has never been supported by evidence in the real world. During the New Deal, despite 5% of the workforce being employed by the CCC and WPA, unemployment remained relatively constant. The jobs created by government were almost completely offset by jobs destroyed in the private sector. We got some nice National Parks' buildings from the CCC, and nice paintings on Post Offices from the WPA, but no economic growth. Over the past 15 years or so, Japan has had a similar experience.

We will get some good infrastructure projects out of the spending bill and some wasteful ones. Some people who have lost their finance job that won't come back will get to stay in their house a little longer than they would earlier. Some state and local governments won't have to cut as many programs. What we won't get is stimulus.