Quote of the Day
The latter part of a wise person's life is occupied with curing the follies, prejudices and false opinions they contracted earlier.
Jonathan Swift
The Dems' Lay's Potato Chip Tax Strategy: Thumbs DOWN!
Republicans in the lame duck grand bargain last year should have seen this coming. Payroll taxes (the OASDI or social security portion, normally 6.2%) fit the textbook definition of a regressive tax (because there's a cap on the first $106,800 of income subject to the tax in 2011) NOTE: the Medicare portion of FICA, 1.45% of income, does not have an income cap. Also, the employer matches employee OASDI and Medicare tax payments; self-employed individuals pay both portions.
I and others do not see mandatory payments for senior citizen retirement benefits as taxes: they don't pay for government infrastructure and operations addressing core public benefits including public health and safety and common defense, international relations and a justice system protecting individual life, liberty and property. (See my blog description.)
It's bad enough that the Democrats engaged in moral hazard by enacting senior citizen programs that to some degree shielded workers from the need to plan and save for retirement; even worse, these programs are underfunded by just under $50T, a generation of federal revenues.
Although Republicans would welcome a permanent payroll tax cut, that would be responsible only if we resolved the long-term insolvency of these programs and instituted reforms that reduced aggregate obligations (e.g., by privatizing programs or reforming benefits to a sustainable level, given actuarial projections). This year's temporary employee 2-point cut amounted to a 16% drop is OASDI payments over a reduced taxpayer base, not to mention a large number of retirees eligible for early social security benefits at 62 electing to retire given poor job prospects. The pay-as-you-go Ponzi-like scheme is already in the red, and the unpaid-for tax cut has exacerbated the funding shortfall.
Agreeing to a one-year payroll tax cut was a no-brainer to President Obama. An unpaid-for tax cut? Well, that's only a problem when it comes to expiring long-term tax rates for those whom assume a disproportionate amount of the tax burden. Nearly two and a half years into the jobless Obama recovery, Obama wants to not only extend an unpaid-for tax cut--and worse yet, undermine the funding for social security--but extend it, on the backs of millionaires whom have already paid more than their fair share of the income tax burden. This would essentially cancel out the lockbox concept FDR set up to gain support for passage of social security and exempt it from future budget cuts: Obama not only wants upper-income taxpayers to subsidize government costs for the rest of us, but he now wants them to underwrite the costs of our retirements, never mind the fact that social security payments are already redistributionist in nature (i.e., well-to-do taxpayers on average will pay more than they will receive, but lower-income taxpayers on average receive multiples of what they put in).
Obama seems to believe when it comes to middle-class tax cuts, regardless of how or whether they are paid for, "betcha can't pass just one one-year payroll tax cut". Thursday night the Senate Democrats' version involving Obama's desire to halve employee payroll tax deductions, paid for by a class warfare tax rate, failed to reach cloture 51-49. The GOP plan, which would have continued the current 2-point payroll tax cut but pay for it by cutting spending elsewhere (e.g., cost savings off the federal payroll), failed 78-20.
Current negotiations seem to be centered on extending the existing payroll tax cut plus bundling other package elements (e.g., unemployment extensions). I am opposed to this; the payroll tax cut (without suitable policy decisions) is little more than an ineffectual repackaged stimulus. Since it is not permanent, by Friedman's permanent income hypothesis, we do not expect consumers to spend as they might with a permanent increase in discretionary income.
The Republicans should know better than to consider this: if you don't stop it now, over 2 years into an economic recovery while consumer spending has also recovered, when do you let it expire? Have my fellow Americans not noticed what's happened in Europe over the past year or two as unsustainable government spending have led to austerity measures?
Americans have a built-in advantage: their currency is the de facto world currency. They don't have to convert dollars into euros, yen or yuan to do business. The US can simply print more dollars to cover debt. Of course, other countries know that, and there's a price to pay, like a lower standard of living.
The Folly of Minimum Wage Laws
Minimum wage laws are the most counterproductive policy we can have in effect during a time of high unemployment. It's not that businesses, especially small businesses, don't want to pay their workers more. It has to do with trying to control expenses in a tough economic climate where price increases adversely affect demand for products and services.
One of the Saturday morning Fox News business shows spotlighted more than a handful of states were looking at INCREASING the minimum wage. This, of course, drives down the opportunities for lower-skilled workers.
The pros and cons of market demand is best seen in Watford City, ND. To any unaware reader, North Dakota is in the forefront of energy development based on the oil and gas rich Bakken formation, thought to contain billions of barrels of oil. Watford City is in the midst of the energy boom with many energy workers making roughly $70K a year, not including likely overtime. The town's size (from just over 3000 residents) has more than doubled. On the negative side, hotels are booked solid, and apartment rents range from $1500 to $3000/month.
Local businesses have had to raise labor rates to attract workers, with some fast food places having to nearly double the minimum wage, entry-level jobs starting at $12/hour, waiters making $25/hour (including tips), and truck drivers making up to $80K a year. Many businesses have vacant positions (of course, winters in North Dakota can be bitterly cold, so if you can't find a place to stay in advance...) Of course, one would expect to pay more for goods and services given limited local capacities, and in time, sustainable Bakken-related opportunities should draw other businesses and local construction to the area attracted by high prices and profits.
Video of the Day: Former Marine Clayton Treska Thumbs UP!
Musical Interlude: Nostalgic/Instrumental Christmas
Old Welsh Lullaby, "All Through the Night". Everyone is familiar with "Silent Night", the standard Christmas carol lullaby for the Christ child, originally written by an Austrian Roman Catholic priest, Joseph Mohr (melody by Austrian Franz Gruber), later translated into English by American Episcopal Bishop John Freeman Young; the focus of this segment is an alternate, less familiar lullaby often included on Christmas albums. This song became my recent musical obsession. Being single without children of my own, I hadn't researched lullabies. I did know, of course, that many pop stars have recorded albums aimed at children.
What got me started on this? Hallmark Channel recently rebroadcast one of their better holiday films, "Farewell, Mr. Kringle". Let me quote briefly from my review of the film last year in the blog: "My favorite scene in the movie is when Kringle encounters a painfully shy little girl, initially reluctant to sit on his lap; he finds a way to gain her confidence and then starts enunciating this song in a brilliant, affective interpretation--just flawless cadence; it reminds me of the scene from Miracle on 34th Street when Kringle speaks to the lonely sad little Dutch girl--in her own language."
I was curious about that song, which I inferred from context must not have been original, but I didn't remember much of the lyrics beyond a repeated verse, "all through the night". It turned out, thanks to the Google search engine, that's all I needed. A very sweet song (see one version of the lyrics below); I saw a review on Amazon from a mother discussing one of the interpretations of the song, writing that her baby son had been totally captivated by the lullaby and fell asleep within 10 minutes. There are several original Welsh (versus English) versions of the song on Youtube. I chose two of the many covers on Youtube, the first, a very nice acoustic guitar cover, and the second, one of the most affective vocal interpretations (the sweet video of twin boy babies is utterly charming).
Instrumental
Vocal
NOTE: Amy Robbins-Wilson has recorded an album of lullabies (including this one), available for download at iTunes; a 30-second clip preview of her flawless vocal performance of this lullaby is accessible through the link below.
Lyrics
Sleep my child and peace attend thee,
All through the night
Guardian angels God will send thee,
All through the night
Soft the drowsy hours are creeping,
Hill and dale in slumber sleeping
I my loved ones' watch am keeping,
All through the night
Angels watching, e'er around thee,
All through the night
Midnight slumber close surround thee,
All through the night
Soft the drowsy hours are creeping,
Hill and dale in slumber sleeping
I my loved ones' watch am keeping,
All through the night
While the moon her watch is keeping
All through the night
While the weary world is sleeping
All through the night
O'er thy spirit gently stealing
Visions of delight revealing
Breathes a pure and holy feeling
All through the night
Angels watching ever round thee
All through the night
In thy slumbers close surround thee
All through the night
They will of all fears disarm thee,
No forebodings should alarm thee,
They will let no peril harm thee
All through the night.
Though I roam a minstrel lonely
All through the night
My true harp shall praise sing only
All through the night
Love's young dream, alas, is over
Yet my strains of love shall hover
Near the presence of my lover
All through the night
Hark, a solemn bell is ringing
Clear through the night
Thou, my love, art heavenward winging
Home through the night
Earthly dust from off thee shaken
Soul immortal shalt thou awaken
With thy last dim journey taken
Home through the night
