The higher type of man clings to virtue, the lower type of man clings to material comfort. The higher type of man cherishes justice, the lower type of man cherishes the hope of favors to be received.
Confucius
US and South Korea Agree to Trade Deal: Thumbs UP!
(Better Late Than Never...)
Trade deals negotiated under the Bush Administration (including South Korea and Colombia) have languished over the past few years under pressure from organized labor. Apparently the clincher was winning a 5-year period before phasing out a modest tariff on Korean car imports.
There is no reason to expect that a domestic auto industry which has ceded almost every market segment except two of the most fuel-inefficient product lines (SUV's and trucks), which are, of course, highly vulnerable to future oil shocks, will be any the wiser 5 years from now. In a global economy with rapidly expanding middle classes (e.g., China and India), a weak US dollar, and declining domestic production (not to mention an administration hostile to offshore exploration and production), we may see future shocks to the US auto industry as customers once again chase after foreign-made fuel-efficient vehicles. In the meanwhile, GM, instead of making hybrid technology standard on all vehicles, promotes a $40K Chevy Volt, this decade's version of the Edsel, which snobbish, politically correct yuppies with big bank accounts will purchase to show their peers that they are doing their part of making for a greener planet.
Senate Republicans Block Class Warfare Tax Extensions: Thumbs UP!
The Democrats have, in a certain sense, won the propaganda war. First of all, the current tax rates have existed since 2003 (in a reduced form earlier). The Clinton tax hikes had been effective for less than a decade when the Bush tax legislation was passed. Certainly from the common sense standpoint of most people, a "tax cut" means a lower tax than what they're paying now, not 10 years ago. When the Democrats talk about tax cuts for the top 2%, they don't mean changing the top marginal rate from 35% to, say, 32%; they are saying that the 35% the rich are paying today is considered a "tax cut" that needs to be paid to renew it. The absolute hypocrisy of the Democrats is made clear when you realize how "emergency" exceptions to their much hyped "pay as you go" (including unemployment compensation) has become standard operating procedure. They argue we can't "afford" the $70B to continue the 35% tax rate. (They feel entitled the extra 4.6 points from other people's pockets to pay for their ineffectual program initiatives, of course...) Never mind that this all smoke and mirrors nonsense assumes that people in the higher income bracket don't make economic decisions based on the marginal tax rate; that is to say, the negative economic effect will attenuate any revenue accruing from the tax hike; it will result in less investment in the private sector and/or job creation activities, which will suppress economic growth and correlated jobs.
The liberal mainstream media, of course, adopts the Democrats' talking points as their own. Take, for instance, CBS' knowingly misleading banner headline today: "GOP Senators Reject Tax Cuts for Middle Class". In fact, the GOP supports continuing ALL the tax cuts, INCLUDING the middle class tax cut.This is not really surprising when you see their Thursday poll on the issue: "Most Oppose GOP Tax Plan." (The definition of the GOP Tax Plan is to retain the status quo of tax cuts across the board.) You know that the only group where the Democrats class warfare wins a majority percentage (with a total of 70%) is, unsurprisingly, with the Democratic base. The way I look at it is any percentage beyond the 2% that in fact will be paying higher marginal rates is an explicit recognition that punishing economic success is counter-productive (see Ben Stein's essay below). I'm sure if you ask poll participants who do you think they trust with the know-how and ability to create jobs, the private sector or Democrats in Congress, they will indicate the former. I'm sure if you explain to them that, by the same logic, the middle class tax cuts cost over $300B a year, far more than the $70B of the top 2%, the deficit arguments pressed by the Democrats are exposed as disingenuous. If they only knew that most of the 4.6% saved gets plowed back into the economy, ultimately yielding compensatory tax revenues, and the 39.6% rate is going to be applied to a reduced number of dollars when people decide (with maybe another 15-20% paid in state, county or local income taxes) they don't want to work more for the government's benefit than their own...
The bias is so over the top, you'll see ludicrous claims like the following quote from Huffington Post:
The remarks are...one of the clearest signs that the president is not only done ceding any more policy turf to the GOP with respect to tax cut negotiations but willing to let rates expire if Republican don't temper their demands.This is in reference the President demanding that unemployment benefits and up to $70B or more in continuing stimulus tax benefits (the GOP has generally argued if these are funded, the Dems need to do a pay-go, using already allocated funding, not fresh federal debt--the general gist is that Obama and the Dems are refusing to find any such savings, using the "emergency" excuse to spend their grandchildren's money). But consider the palpable nonsense that Obama is "done ceding any more policy turf"; EXACTLY WHAT POLICY TURF HAS HE CEDED TO DATE? A month after the most significant House turnover in over 70 years, the lame duck Speaker of the House pushed through an uncompromising class warfare tax cut that attracted less than a handful of GOP votes and opposed by many more Democrats. This was done after the Senate GOP warned that a class warfare tax cut was dead on arrival.
The Democrats want to portray the GOP focus on continuing all the tax cuts as a payoff to "special interests", the moneyed interests. This is coming from a party which claims two of the richest men in the world, Warren Buffett and Bill Gates, not to mention many (if not most) investment bankers and, of course, the GSE's. This is more of a principled objection to the Democrats' polarizing partisan agenda, picking winners and losers in the economy.
Ben Stein: Flip Flop on Taxes?
I have generally been a big fan of Ben Stein, starting from the time he played a deadpan-delivery teacher on one of my favorite TV series of all time, The Wonder Years. Stein is multi-talented, also being an economist and an author. I've occasionally praised his columns in this blog, although I have distanced myself from his embrace of "intelligent design" (vs. evolution) in the school curriculum.
Today, on Cavuto on Business, Stein was particularly disturbed and responded accordingly to a discussion regarding the issue of the recently announced freezes of government worker salaries. There was his rambling discussion of how unfair it was to ask something of public sector (versus private sector) employees; this was in spite of the fact that many (if not all) local and state legislatures have been chopping personnel to make their budgets, while private-sector workers (including myself) whom in many cases are earning less than we did 10 years, face the risk of arbitrary layoffs or dismissals, and take work with little, if any benefits. Stein is very aware of the need to address trillion-dollar deficits and various studies showing in many professions, government workers outearn their private sector counterparts while at the same time having job security and lush benefit packages not available in the private sector. He seemed particularly disturbed at the idea of a nurse at a VA facility emptying bedpans and finding her pay frozen. (For the sake of discussion, let's not investigate the reasons why the nurse emptying bedpans is employed by the federal government versus a contractor.) He then went into this populist rant about how the rich people in the US had the lowest taxes in the world (simply not true--there are a number of countries with a lower top marginal tax rate) and seemed indignant that bedpan-emptying nurses were being deprived of a decent wage due to the need to give wealthy taxpayers a tax break.
I'm not sure why there was a rant, but I found his earlier statement about punishing economic success more persuasive:
(For the text to Ben's commentary, click here.)
Political Humor
A few originals:
- President Obama made a surprise one-day visit to Afghanistan to rally the troops, among other things. Afghan President Hamid Karzai was disappointed that Obama didn't bring bags of money with him. Obama explained that by American tradition, a fat white dude delivers his bag on Christmas Eve.
- The first business day after Thanksgiving is known as Cyber Monday. Julian Assange offered businesses a 30% discount off his regular rate not to publish its confidential executive emails on WikiLeaks.
Chuck Berry, "Run, Run, Rudolph"
