Quote of the Day
An ulcer is an unkissed imagination taking its revenge for having been jilted.
It is an undanced dance,
an unpainted watercolor,
an unwritten poem.
John Ciardi
It's Hard To Be Humble, Mr. President
"The One" recently had this to say about Australian Prime Minister Kevin Rudd: "Kevin is somebody who I probably share as much of a world view as any world leader out there. I find him smart, but humble."
I would like to dedicate the following song to the Commander in Chief:
Taxes, Taxes, Taxes... It's an IRS World...
There are some pet peeves I have in terms of taxes; quite often, it involves a distinction between classes of people. Sometimes taxes are used not simply to raise revenue but to influence behavior. One example is a proposed 3 percent excise tax on soda pop (raising up to $6B/year for ObamaCare); other examples include cigarette taxes, taxes on booze, etc. ; then there is talk about steeply increasing gasoline taxes, pushing the price up to $7/gallon, hoping to push consumers towards more fuel-efficient or electric cars. As someone who doesn't smoke and seldom drinks carbonated drinks or alcohol (and doesn't drive a gas guzzler), I might be considered as one whom might favor shifting tax burdens to these consumers. However, I think it's unfair to choose specific consumption winners or losers (in fact, some progressives would argue these taxes are regressive): why should a state or local government single out smokers or beer drinkers to close a deficit?
Here's a partial list of taxes pay I found posted on the web:
Accounts Receivable Tax
Automobile Registration Tax
Building Permit Tax
Capital Gains Tax
Cigarette Tax
Corporate Income Tax
CDL License Tax
Dog License Tax
Estate Tax
Federal Unemployment Tax
Fishing License Tax
Food License Tax
Fuel Permit Tax
Hunting License Tax
Inheritance Tax
Inventory Tax
IRS Interest Charges (Tax on top of tax)
IRS Penalties (Tax on top of tax)
Liquor Tax
Local Income Tax
Luxury Tax
Marriage License Tax
Medicare Tax
Parking Meters
Property Tax
Real Estate Tax
Septic Permit Tax
Service Charge Taxes
Social Security Taxes
Road Usage Tax (Truckers)
Sales Tax
Recreational Vehicle Tax
Toll Booth Tax
School Tax
State Income Tax
State Unemployment Tax
Telephone Federal Excise Tax
Telephone Federal Universal Service Fee Tax
Telephone Federal, State and Local Surcharge Taxes
Telephone Minimum Usage Surcharge Tax
Telephone Recurring and non-Recurring Charges Tax
Telephone State and Local Tax
Telephone Usage Charge Tax
Toll Bridge Taxes
Toll Tunnel Taxes
Traffic Fines
Trailer Registration Tax
Utility Tax
Vehicle License Registration Tax
Vehicle Sales Tax
Water-craft Registration Tax
Well Permit Tax
Workers Compensation Tax
Gasoline Tax (42 cents/gallon)
Federal Income Tax
Bonus Video Featuring Abba: This song must be on the top of Obama, Pelosi, and Reid's iPod list--all the progressive things they could do if they had all the money in the rich man's world.
Discussion of the Democratic Party
Bank Bashing Bill Continued
I am a believer of limited government; what does this mean? In part, I'm referring to limiting government to a few core competencies, including national finance, international relations, economic affairs, social services, logistics and resource management, public safety and justice.
Generally speaking, I prefer to limit government micromanagement of industry but that doesn't mean the elimination of regulation. In some cases, some market competitors may ignore long-term impacts of current activities and hence costs and prices are materially understated. For example, allowing unlimited fish catches may drive down prices to consumers in the short term. However, overfishing will impact future yields, resulting in higher costs. Similarly, an industrial company, looking to deal with toxic waste, might decided, absent any restrictions otherwise, to minimize the costs associated with disposal, say, by dumping it in a nearby river (especially if it perceives that disposing of the waste in a more environmentally-responsible manner may raise its costs relative to competitors). I made a similar argument in terms of discussing preexisting conditions with respect to health care providers; any one provider may be concerned with getting saddled with a disproportionate number of high-cost patients. A fairer way would be to identify and spread the costs on a more uniform basis, e.g., across aggregate premium dollars. Government can promote policy goals by ensuring fair competition and cost sharing, resource sharing and sustainability, and transparent information, and limiting adverse human and ecological impact.
When I look at addressing the problem of the 2008 economic tsunami, and the Democratic concept of financial overhaul, I keep in mind certain truths. In fact, Democrats have been bashing banks since Jefferson opposed Hamilton in the first Washington administration. But any reasonable account of the economic tsunami has to ask which parties have constituted the biggest participants in the bailout; the top 10: Fannie Mae, AIG, General Motors, Freddie Mac, Bank of America (all returned), Citibank (half returned), JP Morgan Chase (all returned), Wells Fargo (all returned), GMAC, and Chrysler.
Fannie Mae and Freddie Mac are government-sponsored enterprises which used an implicit federal guarantee to capture roughly half of their market share: Are Obama and the progressive Democrats dealing with the GSE's or the auto companies, which account for half of the top 10, in this legislation? No. Of the remaining half, 4 are banks, only one which has not returned all its money, and one insurer.
So let's look at Obama's strong call for derivatives reform... Let's see. We know AIG dealt with derivatives, and so did Goldman Sachs. If the derivatives business is intrinsically risky, why have we not seen systematic failure across issuers? What caused AIG to fail was not derivatives per se but a management failure; AIG's financial position was deteriorating, and other parties forced a collateral call. Unlike AIG, Goldman offset its own risks with hedges of as great or greater protection. AIG did not hedge its own exposure, which made it operations more profitable in the short term because it didn't incur those costs (penny wise, pound foolish). The Cato Institute makes a compelling argument Congress' 2005 exemption of derivatives from automatic stays during bankruptcy contributed to a collateral run and driving speculators from the market (e.g., the Lincoln proposal) not only reduces liquidity and more favorable pricing points, but also limits a third-party check beyond credit raters and regulators, which, for example, failed to anticipate the Enron fraud. The proposed takeover mechanism in the Dodd measure seems to repeat the same pattern of progressive errors that resulted in the GSE debacle; by treating big banks differently, it provides an implicit government guarantee and a competitive advantage. Contrary to progressive Democratic assurances, it actually sets the stage for future, perhaps even worse bailouts.
Political Cartoon
IBD cartoonist Michael Ramirez elaborates on a point I mocked in the 'thank you' segment of yesterday's post comparing JFK and "The One".
Musical Interlude: Fleetwood Mac Songs
"You Make Loving Fun"
"Gypsy"
"Second Hand News"
"Gold Dust Woman"
