The important thing is this: to be able at any moment to sacrifice what we are for what we could become.
Charles Du Bos
Federal Pay Freeze? The Devil Is In the Details: Half a Thumb Up...
How can one rain on President Obama's parade when he finally takes a first step towards addressing an unsustainable federal payroll? Let me count the ways:
- the pay freeze is for only two years and doesn't affect a large number of federal workers: the military, personnel costs in the legislative and judicial branches of environment, defense contractors, postal employees
- it doesn't include things like bonuses (why, after Obama demagogued against the mischaracterized AIG bonuses, is Obama considering any bonuses?) or step-increases
- it'll only trim up to $5B in projected savings while we've been running $1.3T or higher deficits
- it doesn't include any staffing cuts or pay cuts for those positions paid significantly above comparable positions in the private sector
Any faithful reader of this blog knows I have repeatedly criticized Obama's policy of picking winners and losers in the market place or gimmicky initiatives that are more public relations than actual benefits--remember last years $17B and $100M budget cuts? Remember how with much fanfare he released certain offshore tracks for oil drilling and exploration--which ended up being only about 5% of promising drilling areas?
I get constantly annoyed by politicians (particularly progressive ones) pandering to the politically correct occupations, e.g., military, teachers, policemen, firemen, etc. I do not question and am appreciative of the contribution made by hard-working people in these valuable occupations. Two words: equal protection. We already valuate these services at some level; I'm not going to comment on how fair those salaries are, other than to point out that presumably if a soldier's compensation was inadequate, the military would have a difficult time staffing its available positions. Clearly no amount of money can compensate a mother or widow whom has lost a loved one in the service of his country. But are we to expect if the rest of federal workers get by without increased compensation why are all these other groups of employees "more equal"?
Warmed-Over Sunday Talk Soup
Christiane Amanpour is a disaster at ABC This Week; I am already missing Jake Tapper and George Stephanopoulos (hardly conservatives). This Sunday was the latest installment of the liberal mainstream media once again trying to argue it's just and fair to increase taxes only on the top 2% of compensated workers. Amanpour had 3 guests/couple: Warren Buffett, Bill and Melinda Gates, and Ted Turner. Among other things, Microsoft Chairman Bill Gates was questioned about the failure of his dad's initiative to introduce a new Washington state income tax for high earners, with proceeds dedicated to certain services; the fact that Microsoft CEO Steve Ballmer opposed the initiative made for a predictable question from Amanpour.
Warren Buffett does all the predictable orthodox Democratic talking points: the increasing gap between the rich and the poor, the payment of payroll taxes by lower-income people, the higher relative proportion of taxes paid by lower-income people, the fact that the US economy grew at Clinton's tax rates and even higher.
Let me briefly respond to these arguments. I think that there's a "good old boy" network operating across boardrooms that can be addressed through some stockholder reforms or independent compensation analysts. But there are a number of factors which have contributed to slow wage growth among the lower middle class, including but not restricted to increased globalization and commoditization of low-skill labor and counterproductive public policy, including huge deficits crowding out private investment and high business tax rates. Second, payroll taxes as discussed by Buffett and others are deliberately misleading, because payroll taxes don't support government services; they are investments for future retirement disbursements. The fact is nearly half of the general public pay nearly zero federal taxes (maybe a few minor excise taxes). Third, why is relative proportion of expenses to income relevant? You can also argue food, utilities, and automobile expenses are relatively higher percentages of compensation as well. Finally, the issue has to do with economic growth: all things being equal, higher taxes dampens growth. Growth is what rises all boats.
It's plainly obvious that Buffett's positions are based not on business and economics, but on conventional political ideology. That becomes apparent when he sounded like Chicken Little ("the sky is falling") on the idea that former Fed Reserve chairman Alan Greenspan mentioned: letting all of the Bush tax cuts expire, when you consider almost $3T over the next decade goes to sustaining the "lower 98%" tax cuts.
Let me make myself clear: I believe in a pro-business growth strategy; I'm concerned about uncompetitive high business income tax brackets and successful small business owners in those brackets, about to be increased.
But I also doubt that the Congress is going to close a $1.3T deficit without some serious spending cuts and/or tax increases; now I would prefer to have a consumption tax instead of an income tax increase. If we can't wring $1.3T out of the budget, we need some compensatory revenue. But as a deficit hawk, if the Democrats want to play class warfare, in one fell swoop, I can chop that $1.3T deficit by $400B. Now to the "Chicken Little" Republicans who think if we revert ALL the tax cuts, it will be an economic doomsday, I think shoring up the national income statement and balance sheet will have some compensatory pro-growth effect.
Political Humor
A few originals:
- Sarah Palin, when asked whether she used a ghost writer to write her new bestselling book America By Heart, denied it. Sarah asserted that she had lunch with the real writer just last week...
- Palin's latest book, America By Heart, is considered a battle plan for rallying conservatives to the Presidency in 2012. On amazon.com, Palin's new book trails George W. Bush's #1 Decision Points, not to mention the late author Mark Twain's autobiography and new books by the Rolling Stones' Keith Richards, comedian Jon Stewart, Glenn Beck, and Barack Obama's book for children.
Musical Interlude: Holiday Tunes
Connie Francis, "Baby's First Christmas"
