Congress Defaults

The so-called “Super Committee” failed to yield one iota of progress in resolving our debt crisis and credit-rating downgrade. We knew this would be the result the day it was announced. The leadership of both parties and President Obama should be ashamed for supporting this stunt that merely wasted precious time. The notion that 6 Democrats and 6 Republicans could agree on anything was and is ludicrous. That Congress would abdicate it’s duty in this way is shameful. This will be Boehner’s legacy.

I don’t know what is more frustrating: the ridiculous straw man arguments that the Democrats keep recycling — or the Republicans inability to debunk them.

The left has assailed sensible economic policy for decades via this tactic. Reagan’s policies that focused on cutting top tax rates, a strong dollar and selective deregulation were smeared with the moniker “trickle down” — as if that is what the conservatives were hoping would result. In a grand compromise, tax rates were cut with the promise that spending would be cut later. The Democrat-controlled Congress reneged on that pledge and the resulting deficits were blamed on Reagan’s tax reductions. The fact that revenues doubled in 8 years as top rates were cut from 70% to 28% was and is intentionally ignored. It is worth noting that it was Newt Gingrich and the GOP-led Congress that did get things under control resulting in the alleged surpluses of the Clinton era. (This was mostly smoke and mirrors that involved the raiding of the mythical Social Security “trust fund”; an accounting ruse that would land a CEO in jail.)

Now the Democrats are trying to pretend that the GOP has only one solution to every economic ill. They’ve consistently referred to unchanging tax rates as “tax cuts”. Democrats ramped up spending by 25 % in their 2 years of control and we have a jobless, weak recovery with record debt to show for it. Their stimulus failed as every sensible economist said it would. Keynesian economics can now be relegated to the “ash heap of history”.

The truth is that it is the Democrats who are offering a single solution to all our problems: hike tax rates on the top-earning bracket. A quick analysis shows that this doesn’t result in a substantial increase in revenue or a reduction in debt. Why? As always, there just aren’t enough rich people around. When this is acknowledged the next logical question must be: if taxing the top bracket is insufficient and we refuse to cut spending what must happen? And the only possible answer is: tax rates must then be raised across the board or our exploding debt will lead to excessive money printing, hyperinflation and ultimately, default and economic collapse. The middle class would be wise to take notice and vote accordingly.

Polls consistently show that we hold Congress as a whole in utter contempt – yet tend to give our own representative a passing grade. News flash: If your Senator or Representative has been around for more than 2 terms they are the problem.

I suggest Newt or Mitt or whoever make this their campaign theme:

It’s the spending stupid.

At some point spending and taxes must equate. Deficits at any point ensure higher taxes later. Politicians always prefer later. Later is here. We are at a point on the Laffer Curve where higher rates will produce diminishing returns. Comparisons to rates of earlier eras become faulty as local governments raise their taxes ever higher.

The tax demagogues should be confronted with this simple graph:

The lower rates accompany a period of tremendous growth, falling inflation rates and low unemployment. When I see this graph my impulse is to ask: what gives us the right to seize 90% of anybody’s anything? How did this happen? Isn’t our Constitution designed to prevent exactly this type of tyranny?

As for the spending, our next GOP nominee would be wise to choose Oklahoma Sen. (and Dr.) Tom Coburn as VP. He has outlined hundreds of billions in wasted spending – and yes, much of it is earmarked for Republican projects. This is the time for leadership. The GOP must take the first steps and specify where they will make cuts dear to their own constituency for the good of the country.

We have all the ammunition we need to support a conservative plan for real spending cuts – not just smaller increases – and tax reform that would eliminate the loopholes and streamline the filing process. When properly presented this common sense approach reveals the Democrats singular alternative for what it is: a simplistic and naïve approach that has been used before with disastrous results. Their insistence that it be tried once more is not policy it is a tantrum.

If the current President and Congress can’t take the obvious steps we need to fire them and elect a group who will.

It’s This Simple

Obama and the Democrats want to raise taxes on “millionaires and billionaires” — but then define them as those making more than $250,000 per year.  I think the key to negotiating with these nitwits is to give them what they want.  By how much would we need to “raise taxes” on these selfish bastards to balance the budget?  Well, for those making $250,o00 per year they’d need to cough up an extra $500,000 annually.

Read more here: LINK

Now that we’ve put that to rest, what is their next great idea?

Thanks to Mark Steyn for the tip.

Published in: on October 24, 2011 at 12:29 pm  Comments (1)  
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Debate the Bigger Issue

Instead of playing a game of political chicken with Obama, the Republican leadership should grab the high ground and focus everyone’s attention on the big picture. Everyone knows the debt ceiling must be raised. The question is not whether it will peak at 15 or 16 trillion dollars-the cold reality is that it will be a much higher number. The GOP should not get trapped into negotiating around such a puny issue. They need to move the focus on the bigger, more important concerns. The health of the economy and the debt rating hinge on Washington’s ability to change the trajectory of government spending and the debt it generates. Under Obama, spending as a share of GDP has jumped 25% while revenues have dropped, as they always do, due to the deep recession. Current debt is virtually irrelevant when compared to the unfunded entitlement liabilities that exceed $100 TRILLION.

The only way to solve this problem, which was decades in the making, is with a long-term plan that will transcend the 2 year election cycle. The GOP needs to reject the static scoring that puts a price tag on lower tax rates. The Laffer curve demonstrates that the presumed correlations do not exist. Alan Reynolds recently authored a piece in the Wall Street Journal accompanied by a chart showing income tax revenue as a share of GDP as the top marginal rate was lowered from 91% to 28%. Revenues rose as a raw number and a percentage. (More on that here: LINK)

The silver lining in the current economic cloud is that the Democrats with their super majorities were able to give their economic theories a thorough test. The failure is also thorough and evident. The so-called “stimulus” was neither targeted nor temporary. The Democrats are trying to use it as a new baseline for budgeting. The crown for the party of big spending is properly placed once again. The GOP needs to claim victory and move on. The 2010 mid-term elections are their mandate.

This is our moment. We must seize it. Promises have been made for decades that can never be kept. The age of unfunded liabilities is over. True entitlement reform must include a transition to private accounts so that congress can never again spend what should have been in the mythical trust fund. Our health care is our responsibility. It is not a right-it is a basic necessity, just like food and housing-other areas where government meddling wreaks havoc. Insurance is a risk management tool that adds a layer of bureaucracy and the associated costs. It should be used sparingly, and will be, once it is untangled from the insane tax code.

A vibrant, growing economy can eventually dwarf the debt figures and then we can pay it off entirely. A rational energy policy focused on domestic drilling and proven technologies must replace the “green” fantasy. Real jobs will produce real revenue and help slay the inflation dragon that has already brought us $4 gas. Gains in national security are achieved as well. This message, this vision, can clarify the ongoing debate and serve as a national platform for the 2012 elections.

Pat Duggan

Tax Facts in a Nutshell

We can debate with the left about economics until we’re blue in the face. We can show them Laffer Curves and explain how supply side economics harnesses basic human nature via incentives. Many of us have tried.

Here’s an easier way:

Simply show them today’s column by Alan Reynolds in the Wall Street Journal (LINK).

Or simply show them this graphic:

Why have immoral, confiscatory tax rates when we can keep them low and boost growth and lower unemployment?

Some people are just stuck on stupid.

Published in: on June 16, 2011 at 4:19 pm  Leave a Comment  
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Reality Check For The Left

If we don’t force our elected representatives to cut spending they will be forced to tax YOU, regardless of your income, at a painfully high rate. The liberals have been lying about taxes ever since they first passed the initial income tax on “only the very wealthy” and only at small levels. They said they would never tax YOU-but they are now, aren’t they? They feed the beast of government and then when we try to cut some programs they scream bloody murder. Never forget that in the recent budget “negotiations” their proposal was to cut zero from our bloated federal budget. Nothing was on the table.

At some point tax revenue and spending levels must match. Borrowing only delays the inevitable but that is the preferred method for our gutless politicians. As anyone who has ever financed anything knows, it just costs more in the long run. Imagine a world in which everything that Congress authorized had to be paid for immediately. Imagine what it would be necessary if they were not allowed to create an unfunded liability. What if there really was a Social Security trust fund? A “lock box”? Washington pols would be faced with some serious decisions. They would have to raise taxes on everyone to levels that would end their political careers, or they would immediately have to trim the fat from the budget. Suddenly there would be no funds available for the Rock and Roll Museum or the “Bridge to Nowhere”. We wouldn’t have hundreds of federal agencies doing virtually the same thing. The Department of Redundancy Department would finally be shut down.

Today’s Wall Street Journal has the hard numbers here. It is eye opening.

LINK

Pat Duggan

Published in: on April 18, 2011 at 8:31 am  Leave a Comment  
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Obama Pivots Back

Well that didn’t take long. Obama presented his budget proposal today. It is an insult to the intelligence of the American people. Government spending, taxes, deficits and their impact on the economy are of concern to all tax paying Americans-but apparently not to the President. There was no pivot to the center-just pandering to the voters and a compliant media.

I am not going to go into detail on the numbers or post one link. Any reader can simply go to his favorite news page or turn on the TV. The specific numbers simply provide a laugh track.

The government is currently running ANNUAL deficits of 1.5 TRILLION DOLLARS. Obama is proposing overall spending increases on top of an already inflated base to set a new spending record. He is also proposing myriad tax increases, including a hike in rates in two years when he just admitted that would be harmful for the economy. He combines the tax hikes with  puny spending cuts in targeted programs and voila! He claims he will reduce the deficit by 1 trillion over 10 years.

This is Orwellian double-speak. The deficits and debt are increasing. Period.

The GOP should denounce this for the stinking pile of crap that it is. Every serious Democrat should renounce this. The 2012 campaign starts now. Obama just gave the challengers are huge head start.

Pat Duggan

Tribune’s Chapman Blows it Again

For a brief minute I thought Steve Chapman, faux conservative of the Chicago Tribune and member of their editorial board (which helps explain endorsements of Obama and Emanuel) had read my blog-or at least come to his senses. But after reading his commentary “Why Obama wants to cut corporate taxes” it is clear that he doesn’t fully comprehend the issue.

Yes, we are at a competitive disadvantage with our highest-in-the-world corporate tax rate-but he doesn’t mention who really pays that tax: all of us.

LINK

Pat Duggan

Published in: on February 10, 2011 at 11:11 am  Comments (1)  
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Pretzel Logic

I am a big fan of the Fox News “Special Report” especially the All Star panelist Dr. Charles Krauthammer. He is brilliant and adept at taking complicated issues and reducing them to clever short bursts of highly quotable commentary. But he is wrong occasionally. Even highly respected fellow panelists like Jonah Goldberg are disinclined to challenge his logic (LINK) although Steve Hayes and Fred Barnes do engage in respectful disagreements fairly regularly. Even those occasions are more typically about the nuances.

As a mere blogger I am even less inclined to call him out but his take on the recent tax compromises is not just wrong-it’s illogical. What he’s talked about the last few nights is spelled out in his column here: LINK

I’ll defer to Dan Mitchell of the Cato Institute to do a thorough breakdown of the deal here: LINK

As I have shouted from the rooftops there are no tax cuts-we’ll merely avoid the impending tax HIKES. OK. Extension of unemployment benefits typically leads to extending the  high unemployment rate-so no stimulus there. But where C.K. really loses me is when he calls it a second stimulus and projects that it will lead to economic recovery and a second term for Obama. The first stimulus was a colossal failure so why does he think a second one would work?

If anything I think the GOP has won a solid victory here. They avoided a huge tax hike and if the economy does recover they can claim a role in that victory. They also have a card to play in the 2012 elections: Vote GOP or the Democrats will raise tax rates.

Since the day Obama took office there have been those on the right expecting an eventual Clintonian pivot or move to the center. I’ve sided with the minority who thought it obvious that where Clinton was politically savvy Obama was a pure ideologue, and naive and inexperienced to boot.

Obama is not pivoting. He is losing. He is finding that he is not immune from political realities and the pressures they bring. His press conferences devolved quickly into temper tantrums as he lashed out at the right and left. He is frustrated that he is merely President-not King.

His party has just lost the House and the Senate is weakened as many Democrats fear 2012. As his term nears the end of it’s second year the economy is still struggling with unemployment rising to a 25 year high of 9.8% in the most recent report. He must shoulder the blame now. The time for blaming Bush is past.

When he concedes that raising taxes on the top bracket can harm a fragile economy he reminds us that he exposed his true priorities to Charlie Gibson during the campaign (LINK). An unspecified concept of “fairness” took precedence over revenue growth. He still believes that. Voters don’t.

Pat Duggan

Published in: on December 10, 2010 at 6:19 pm  Leave a Comment  
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Election Recap

I sent a letter to the Tribune today. I do not yet know if they will print it. Brevity is not my strength but it’s essential to have a chance in the paper. Below is my short attempt to recap the election, followed by what I would have liked to include.

The letter:

There is much to take away from the mid-term election results. Sure this was a rejection of Obama’s agenda and the Democrat party but it is not, as some pundits allege, an empty victory for the GOP. They won in key areas where they embraced candidates who espouse the principles that the tea parties advocate: fiscal responsibility, smaller government and respect for the Constitution. Quality candidates like Rand Paul won by large margins. Marco Rubio is a rising star.

Weak candidates lost. Christine O’Donnell was not ready for prime time but her embrace of tea party ideals was not her undoing. Some solid candidates lost close elections while being abandoned by the GOP organization. Sharron Angle put up a good fight but could not overcome the big union push for Harry Reid and the lack of support from her own party. Joe Miller may lose to write in candidate Lisa Murkowski after she lost the GOP primary. The party should have put a stop to that. They will lose control of their own primary system if they are not careful.

Like California, Illinois is late to the party. Public sector unions got out the vote for their Democrats. They know that the first step toward fiscal sanity is pension reform-so they fought it. They have delayed the inevitable. Chris Christie in New Jersey has noted that these same people will thank him some day. The current cuts may be painful but it is the only way to save the system. Illinois newcomers Joe Walsh and Adam Kinzinger are a great step in the new direction. There will be more.

The unaffiliated grass roots organizations are the driving force that is resulting in a new Republican party. They know that George Bush did not clamp down on spending and gave the Democrats an opening. The new GOP will restore fiscal restraint as a key plank. They know that respect for these core principles is what attracts the independents-not mushy moderation. America needs to take big steps forward. The Gop can lead the way.

If Chicago and greater Illinois voters don’t wrest control of their government from career hacks intent on continued borrowing they will face a certain future of departing businesses, higher unemployment and higher taxes at every turn.

End of letter.

The problems wasn’t / isn’t the tea parties-it’s the mainstream party’s inability to harness their energy and the unwillingness to hear the message.

The GOP organizations have treated the tea parties the way print journalists treat bloggers-like something you stepped in.

On election eve I ran into a neighbor who said she’d been hard at work “getting out the vote.” I told her I’d be attending some victory parties the next few days. She furrowed her brow. When I specified I’d be at the local Tea party post-election meeting she shook her head. “They’re just so extreme.” Her concern was evident. You’d think I’d just announced I was on heroin. There was more. She was insulting. I nipped it in the bud. I told her I didn’t appreciate her tone. “I’ve been there-you haven’t” I said. “What is extreme about stopping the deficits and upholding the Constitution?”

She came back with her talking points: two unfunded wars, TARP, stimulus, “tax cuts to the rich”…all of it verified by factcheck.org and the CBO. Never mind that one is a left wing outlet and the other is a typical government agency abused by politicians who know how to game the system. Their Obamacare math has already been exposed as fiction. I assured her I could produce data that showed lower tax RATES can and have produced increased revenue. Even JFK knew that. I noted that top rates had been 70% to 90% for most of the previous century. LINK

“What gives anyone, anywhere, at any time the right to take 70% of anybody’s anything?”

“Well maybe there’s people who need it more…” OK, I said, that’s socialism. There was no need to continue. In fact I knew it would be a complete waste of my time. That’s why I launched Center Debate, to have discussions among the open minded-not hard core leftists convinced that there is no other truth.

I attended the monthly Chicago tea party meeting last night (November 3). It  was a victory party. The guest speaker was Joel Pollack who lost to entrenched, uber liberal Jan Schakowsky in Chicago’s 9th Congressional district. I was SO IMPRESSED by Joel Pollack. He made a short classy speech and then took tough questions for an hour. Smart answers to each. This guy is ready. Now that Pelosi has been dethroned Jan and her flying monkeys can assume a more prominent position in the socialist party.

So what’s next? The various tea parties will continue to meet and work to promote better candidates. They’ll hand out pocket constitutions (an ongoing project here in Chicago). They will continue to influence the reshaping of the GOP.

The GOP needs to put an end to the left wing talking points of “tax cuts to the rich” and “the failed policies of George Bush”. The housing bubble was driven by liberal housing policy and government sponsored agencies like Fannie Mae. This scandal remains unaddressed.

The debate is about tax RATES-not tax cuts. There hasn’t been a tax cut in 7 years. They are not checks handed out. It’s not money that grows on the government tree. It’s OUR money and we get to decide how much we’ll give the government to cover constitutionally-appropriate shared services.

Karl Rove had W’s ear for all those years that he didn’t veto the spending increases, didn’t fight harder for GSE reform and didn’t take on the entitlement mess. We need strategists who can shape a message that these are the issues we need to face now or our very future is at stake.

Chris Christie is the model. Nobody does it better-but it is not un-learnable. Christie may be too early in his job as Governor to take the next step. Rubio hasn’t even been sworn in as Senator-yet and I see him as a future president. Only Obama would be allowed to skip a pay grade.

Pat Duggan

Published in: on November 4, 2010 at 7:29 pm  Leave a Comment  
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GOP Is Blowing the Tax Rate Debate

This is driving me absolutely crazy. There are no “tax cuts” on the table. Without intervention from congress there will be a massive tax increase. The GOP needs to learn how to frame the debate and take control of the message. Everyone from RCP chairman Michael Steele to the TV/ Radio people are guilty of falling into this trap. This mistake started with Bush and the Republicans in 2001 and 2003 when they agreed to the “sunset” provisions that would force a future vote in an unsure congress. The Democrats knew then they would be calling them tax cuts forever.

Ask your favorite liberal: tell me exactly what is the specific “failed Bush policy” you think caused this economic mess? When pressed, if you get an answer it is likely to be “tax cuts to the rich”. They think that the government grows money on trees and gives it to rich Republicans.

John Boehner and the GOP geniuses need to take control of the situation. Every TV appearance, every soundbite should repeat this theme:

“We are talking about hard working Americans that are having 35% of their income seized and diverted to failed pork barrel spending programs. These are the small business owners that are the #1 source of new jobs that this damaged economy desperately needs. Even Keynes wouldn’t support a tax hike under these circumstances.”

That is the message. Hammer it home. Get out your Laffer Curve charts and explain it to the American people. Make them aware that for 64 out of 70 years until Reagan came along top marginal tax rates exceeded 50% and in most years were between 70% and 90%. Is there anybody who thinks the government deserves more then half of their paycheck-let alone 90%?

LINK

Pat Duggan

Published in: on September 13, 2010 at 9:20 pm  Leave a Comment  
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