Everyone has talent.
What is rare is the courage to follow the talent
to the dark place where it leads.
Erica Jong
S 3414 Cybersecurity Act Moves Forward 84-11:
Thumbs DOWN!
I do not like the rush (upcoming Congressional recess?) and related lack of transparency, I don't like the fear-mongering being used (e.g., by Sen. Collins (R-ME)) to pressure quick passage, I'm worried about certain monitoring authority being given to ISP's, and I share IBM's concerns about a government-dominated, inflexible, slow, bureaucratic approach to information sharing between government and industry.
The latter point reminds me of a boss I once had: I wanted to give my input to a relevant decision process (I knew the salient facts better), when he stopped me, noting that it was his decision and if he wanted my input, he would have asked for it. In this context, IBM similarly might be closer to the problem and also know the right approach, but all the government bureaucrats would have to do is bide their time and then impose their decisions.
Lightning Round
- US-China Trade War Over Green Energy. The Obama Administration, probably in response to Romney's tough talk on China and currency (which I oppose), may raise the stakes of a trade war in the near future over "anti-dumping" wind-energy towers. China is upset about a variety of duties slapped on nearly two dozen Chinese energy products and a handful of states' renewable energy subsidies. Of course, Obama is trying to renew a number of green energy subsidies from 2009 (which, I believe, won't go anywhere in the House). All of these drives a free marketer/free trader like me absolutely crazy.
- The ObamaCare Birth Control Kerfuffle Moves to Court. So far, 24 cases in court. This one is pretty much a slam dunk loss for the Obama Administration on religious liberty grounds, although one judge dismissed a lawsuit from 7 states on the grounds it was premature.
- George Reisman, "An Open Letter to Warren Buffett". I have read only a few of Dr. Reisman's articles, but I'm a fan. Here is his archive on mises.org: I thought his article (2/08) on standing Keynesian economics on its head; the subtitle says it all "Saving Not Consumption as the Main Source of Spending" "Keynesian Macroeconomics Plays with Half a Deck: Inadequacy of GDP: It is an economics almost exclusively of consumer spending, not an economics of total spending in the production of goods and services." Good stuff.
Warren Buffett may be a great investor, but he's a lousy economist. "Why Your Taxes Are Too High, Not Too Low, Mr. Buffett". Let's just take dividends taxed at 15%. But those dividends come out of income that you've already paid (as part of business income) up to 35% plus, say, another 4% for state income tax. To compute the "real" tax, you need to add your personal dividend taxes onto your share of company income taxes and divide that by your share of company income. The corporate tax (paid before you see the dividend check) is a hidden tax paid in your behalf.
- The "Blame Bush" Game Isn't Working Anymore. A new poll shows "66 percent believe paltry job growth and slow economic recovery is the result of bad policy. Thirty-four percent say Obama is the most to blame, followed by 23 percent who say Congress is the culprit. Twenty percent point the finger at Wall Street, and 18 percent cite former President George W. Bush."
I've mentioned on a couple of occasions FDR's politically cunning move on social security: a number of advisers wanted to fund pension payments out of general revenues. FDR refused, wanting a lockbox concept separate from general revenues: he also wanted a mandate. Why? General revenues can be subject to budget cuts; if everyone, including high-income earners, was vested in social security, FDR felt that his social security program would be invulnerable to political attack.
Thomas DiLorenzo showed that this Machiavellian tactic was earlier used by Alexander Hamilton. We can see almost from the get-go a crony relationship between the affluent (businessmen) and the young government: "A national debt, if it is not excessive, will be to us a public blessing."
One way he did that was to convert old state debt into national debt: at face value. A lot of people holding bonds (e.g., Revolutionary War veterans), not knowing the deal, sold off their bonds at a fraction of face value to wealthy connections.
The reason Hamilton gave for favoring a large public debt was not to finance any particular project, or to stabilize financial markets, but to combine the interests of the affluent people of the country — particularly business people — to the government. As the owners of government bonds, he reasoned, they would forever support his agenda of higher taxes and bigger government.Hamilton also vested powerful Northeast businessmen through investment banking of government bonds and the creation of a national bank (which financed government overspending). Obviously the higher the federal revenues, the more certain were repayment of principal and interest, so bankers supported higher taxes.
Tariffs were a key source of federal government income--and a form of protectionism/mercantilism, to which Americans had experienced the downside as captive consumers in the colonies. Gary North notes in his related "Tax-Loving Conservatives" that big government conservatives liked (and still do like) high tariffs. High tariffs meant that (primarily Northeast) businessmen benefited by artificially higher, noncompetitive prices for their goods at the expense of consumers.
To this day, paleoconservatives like Pat Buchanan are big promoters of high tariffs and corporate welfare. In terms of the national parties, in particular, the second tier, this point of view is represented by the Constitution Party.
Maryland's Economically Illiterate One Party Leadership
The sad truth is that the one-party monopoly that rules Annapolis has a failed record of lost jobs, higher spending, record tax increases and broken promises. It’s unacceptable and Marylanders deserve better. I think it’s time we said ‘enough is enough’. The time has come for us to stand up together and fight back for a change. - Larry Hogan, changemaryland.orgFor the most part, this blog has focused on national, not state politics. Maryland state politics is currently dominated with Democrats and is a major beneficiary of federal superspending, with many social liberal Democrat federal bureaucrats and contractors in the collar counties of DC (along with north Virginia). For the most part, Maryland was an exception to the Tea Party revolution behind the sweeping 2010 elections. While Democrats were already starting to distance themselves away from Obama, incumbent Governor O'Malley was practically begging Obama to campaign for him. It turns out that he really didn't need Obama: the statewide Maryland Dems (including Sen. Mikulski) basically won going away.
What was particularly notable is that they were running on the same neo-Keynesian platform hype, i.e., picking winners and losers in the economy, new/green technology, etc., the same old same old campaign hype that seemed to dissipate elsewhere as the economy sputtered, and the Democrats focused on financial and health care reforms and climate change legislation. I knew with Democrats firmly in charge of the Maryland legislature and the governor's mansion, we were in for at least another 2 years of dysfunctional high liberal/progressive politics. O'Malley before had engaged in class warfare tax hikes, which soon thereafter drove his approval ratings to the 30's before rebounding strongly enough to win the 2010 rematch with former GOP Governor Ehrlich by an even wider margin than before.
It's gotten to the point I don't even watch local TV news anymore. I recall writing about the millionaire exodus after the first O'Malley tax hike, so the recent tax-and-spending spree by a partisan legislature and governor didn't really surprise me. According to the Tax Foundation:
On May 22 Maryland Gov. Martin O'Malley signed into law a bill raising income taxes and tobacco taxes and ending certain business tax breaks. The bill increases tax rates for single filers making over $100,000 ($150,000 for a couple) with a new top rate of 5.75% on income over $250,000 ($300,000 for a couple). It also cuts the personal exemption for each member of families with income over these thresholds.Is it a coincidence that Obama also targets his tax increase for households over $250K, too? I don't think so. And Martin O'Malley, term-limited with his gubernatorial tenure due to expire in 2 years, already has his eye on the open 2016 Democratic Presidential nomination: "Gov.Martin O'Malley has created a federal political action committee [O Say Can You See PAC] that could become the main financial vehicle for a presidential run in 2016."
O'Malley has found himself challenged by the nonpartisan anti-tax group Change Maryland:
The study, by the anti-tax group Change Maryland, says that a net 31,000 residents left the state between 2007 and 2010, the tenure of a "millionaire's tax" pushed through by Gov. Martin O'Malley. The tax, which expired in 2010, in imposed a rate of 6.25 percent on incomes of more than $1 million a year. The Change Maryland study found that the tax cost Maryland $1.7 billion in lost tax revenues and has added 24 new taxes or fees in recent years, and the state’s wealthiest counties also had some of the largest population outflows.The millionaire exodus is a contentious point; for example, if wealth correlates with age, one might expect a retirement exodus for other reasons; for example, the retiree is no longer making a high income subject to higher taxes and prefers a warmer climate for his senior years. Will millionaires simply move over the state taking an extra 1 to 2% of their income? This is a point progressives like O'Malley never get: personal or business decisions are made at the margins, i.e., the proverbial straw that breaks the camel's back; it's not just the high taxes but the regulations and other arrogant progressive meddling in the economy. Other more business-friendly states (e.g., Texas and Florida, which don't tax personal income at all) become more attractive.
Maryland had better come to terms with the inevitable: its drafting off federal superspending will face a day of reckoning because the government spending bubble is unsustainable: when people's incomes are flat and government spending continues to grow, it's not different from a housing market bubble exceeding the income gains of target home buyers.
O'Malley has fought back aggressively, in the process using Tax Foundation data. The Tax Foundation was not happy with the fact that (surprise, surprise) O'Malley was cherry-picking the most favorable relevant statistics while glossing over the preponderance of negative statistics:
Maryland’s tax structure – sales, corporate, and personal income – makes them near the bottom of the heap for tax system competitiveness as a whole; our 2012 State Business Tax Climate Index ranks them 42nd out of 50 states. (They were in the 20s a few years ago.) Maryland’s tax structure is not competitive generally, and getting worse. Maryland also has the 46th worst tax burden for new businesses. Maryland may have high incomes, but it also has a high cost of living
Musical Interlude: My Favorite Groups
Blondie, "One Way or Another"
