“No Man’s life liberty or property is safe while the legislature is in session”.

- attributed to NY State Judge Gideon Tucker

Saturday, September 18, 2010

David Malpass' Primary Defeat In NY

I was saddened to read of David Malpass' defeat in New York's GOP Senate primary.

Malpass is a very astute, credentialed, politically aware economist. Late of Bear Stearns, Malpass was a frequent guest on CNBC, where his frank and sensible comments were a delight to hear and watch.

Perhaps the silver lining of his defeat is a return to a business channel I watch. But New York and the Senate and, thus, the nation will be poorer for that.

Friday, September 17, 2010

A Thought About VATs vs. Income Taxes

Generally speaking, I don't like the notion of a value-added tax in the US. It's too opaque and hidden.

But there are two good things about it, compared to our existing income tax.

One is that a VAT focuses on spending, not savings. Therefore, if it were our government's major revenue-raising tax, it would resolve the current folly of doubly-taxing dividends and taxing savings at all.

The second reason that a VAT could be preferable, if set at a proper, effective rate, is that it would allow for a dramatic shrinking, if not elimination, of the IRS.

It's unlikely that our Founding Fathers ever imagined, nor would have allowed, the existence of a governmental agency with the powers and scope of the IRS. The degree to which it allows government to intrude into our lives and gather information about us is simply unparalleled.

Under a VAT, it's possible to make tax collections much more perfunctory and less a matter of annual filings. Like a sales tax because, in effect, it is a form of a sales tax. And nobody files annual sales tax reports.

Imagine the benefits of firing all IRS personnel and totally eliminating this scourge of American citizenry.

If a VAT tax rate could be set to approximate low, growth-inducing income tax rates, and all income taxes were abolished, I might actually consider being in favor it.

Thursday, September 16, 2010

Conventional GOP vs. Tea Party Candidates

Much is being made of in the media of the various Tea Party primary victories in the wake of Tuesday's election.

Perhaps, most notably, Delaware Tea Party Republican Senatorial candidate Christine O'Donnell's triumph over moderate GOP veteran Mike Castle.

Yahoo's homepage, never one to be neutral, screamed out this headline,

"Tea party victory endangers GOP’s goal of retaking the Senate"

At the end of the website's heavily partisan 'news' story about O'Donnell's primary win, this appeared regarding the national GOP's reticence to spend money on her general campaign,

"Not that she cares.
"They have a losing track record," O'Donnell told CNN Tuesday night. "If they're too lazy to put in the effort that we need to win, then so be it." "

Meanwhile, yesterday morning, alleged grafter and (too) long-serving Pennsylvania Democratic Representative Paul Kandorski gave Castle the ultimate kiss of death, calling him "an EXCELLENT Congressman."

That alone should be testimony to Castle's vulnerability. A Democratic Congressman suspected of some multi-million dollar corruption at the expense of the federal treasury endorsing him as a great guy.

But let's get back to O'Donnell's comment.

I, along with, I am sure, many other conservatively-inclined independents, have given much thought to the conundrum of preferring potentially unelectable conservative GOP candidates, often backed or inspired by Tea Partiers, to liberal-to-moderate political veterans who may be much more certain of beating their Democratic opponent in November.

Recently, I read a Wall Street Journal editorial which paraphrased the late Barry Goldwater as counseling conservatives to 'vote for the most conservative candidate.....who,' but I can't now recall, nor find the quote to verify, how it finished,

"is running," or "who is electable?"

I think it was the latter. And this is the issue at hand.

The conundrum of the GOP primary voter is different from that of the same voter as an independent in a general election, as I wrote here.

O'Donnell is implicitly standing for principles. She has, in effect, said,

'Vote for me. I'll do what I say. Mike Castle will waffle and is likely to side with liberals.'

And the media chides the GOP for letting principled conservatives, who have nowhere else to go, 'shrink the party's tent.' As if electing unreliable Republican Senators is better than electing liberal Democrats.

After considerable reflection, I come down on the side of voting in primaries for the most conservative Republican running. In New Jersey's last gubernatorial primary, that was not Chris Christie. I voted against Christie in the primary, but for him in the general election.

If I lived in Delaware, I'd have voted for O'Donnell. If she loses the general election, then Delaware wasn't ready to be represented in the Senate by a conservative, and the GOP didn't do a good job finding and backing a reliable conservative for the Delaware Senate seat.

How many Jim Jeffords, Arlen Specters, Lincoln Chafees, Susan Collins' and Olympia Snowes do Republican voters need to elect to learn not to trust the fence-sitting Eastern US "moderates?"

The media hopes to keep the GOP as a pale copy of the liberal Democratic party by coaxing it to nominate, back and elect liberal Republicans.

But what independents want is a break from both parties creating a socialistic, European-style State with a capital S.

Preferring unelectable conservatives to electable, but untrustworthy liberal Republicans, shows a stand for the principles so many Americans feel have been lost by politicians of both parties. Particularly Republicans.

After all, Democrats have never, in my lifetime, espoused smaller government and greater personal liberty and freedom. Republicans have, if only periodically.

Christine O'Donnell embodies the hopes of independents and conservative Republicans, regardless of her ability to win the general election.

I, for one, am not so sure a GOP Senate majority composed of the likes of Mike Castle will please me- or most independents. It probably will only frustrate me marginally less than a Democratically-controlled one.

Ideally, I want a GOP caucus of more than 50 Senators who will toss Mitch McConnell and his team out, put Tom Coburn and Jim DeMint into power, and really go about shrinking the federal government.

I don't think Mike Castle would do that. Perhaps Delaware conservatives should continue working to find an electable conservative, rather than be disappointed by Castle's probably defection on the tough votes in the Senate.

Wednesday, September 15, 2010

Why Bungling Boehner Can't Be The GOP's Next Speaker

I wrote this recent post concerning Ohio Republican and House Minority Leader John Boehner's presumptuous media tour last week.

In it, I contended,

"Boehner is still tarred with the GOP House antics of 6 and 4 years ago. He has that surreal tan that so many others also notice and rarely fail to mention. And the apparently endless rounds of golf.

Seeing Boehner behaving like he will simply be crowned Speaker is disgusting to me. It demonstrates that Boehner, as presumptive Speaker for the GOP, and his party, is little different than Frisco Nan, and hers, when it comes to wanting power before working for the people who elected the House members.

If there were ever an instance to show people that the power game in Congress is rigged, it surely is Boehner counting votes of new members not yet elected, and simply taking on the role of Speaker in Waiting."

Now we have Boehner admitting, on Face The Nation this past Sunday, that he and, presumably, his fellow Republicans in the House, would take half a loaf, rather than fight for a full one. That is, they will cave and vote to extend the Bush tax cuts for some taxpayers, but not those with the highest incomes.

So much for principle. Or Boehner's intelligence and agility, for that matter.

Eric Cantor tried desperately to repair the damage this week, but it's not clear that is now possible.

The Wall Street Journal's staff editorial about this yesterday wondered if Boehner is "ready for prime time."

No, he's clearly not.

Which is why he shouldn't even pretend to be the next Speaker.

Here's how I see it. John Boehner is a GOP political hack who doesn't behave very intelligently. Eric Cantor is an extremely intelligent man who is in the GOP's current leadership cadre, and, for now, a politician.

See the difference? We know Boehner's a career pol, and that he's not very bright. However, we know Cantor is bright, but we don't yet know that he's a careerist in the federal government. Or politics generally, for that matter.

Shouldn't that make a potential GOP Speakership far more likely for Cantor, not Boehner?

I think so. Boehner's recent gaffe on CBS's Sunday morning talk show only reinforces that point.

Tuesday, September 14, 2010

Paul Ryan's WSJ Manifesto

House member Paul Ryan (R-WI) and AEI president Arthur C. Brooks co-authored an impressive editorial in yesterday's Wall Street Journal entitled The Size of Government and the Choice This Fall.

Here are some of the most illuminating passages from their piece,

"In response to what each of us has written in the preceding months, we have heard again and again that the choice we pose is too stark. New York Times columnist David Brooks (no relation) finds our approach too Manichaean, and the Schumpeter columnist in The Economist objected that, "You can have a big state with a well-functioning free market."

Data support the proposition that Americans like generous government programs and don't want to lose them. So while 70% of Americans told pollsters at the Pew Research Center in 2009 they agreed that "people are better off in a free market economy, even though there may be severe ups and downs from time to time," large majorities favor keeping our social insurance programs intact. This leads conventional thinkers to claim that a welfare state is what we truly want, regardless of whether or not we mouth platitudes about "freedom" and "entrepreneurship."

But these claims miss the point. What we must choose is our aspiration, not whether we want to zero out the state. Nobody wants to privatize the Army or take away Grandma's Social Security check. Even Friedrich Hayek in his famous book, "The Road to Serfdom," reminded us that the state has legitimate—and critical—functions, from rectifying market failures to securing some minimum standard of living.

This is made abundantly clear in surveys such as the one conducted by the Ayers-McHenry polling firm in 2009, which asked a large group of Americans, "Overall, would you prefer larger government with more services and higher taxes, or smaller government with fewer services and lower taxes?" To this question, 21% favored the former, while 69% preferred the latter.

Unfortunately, many political leaders from both parties in recent years have purposively obscured the fundamental choice we must make by focusing on individual spending issues and programs while ignoring the big picture of America's free enterprise culture. In this way, redistribution and statism always win out over limited government and private markets.

Why not lift the safety net a few rungs higher up the income ladder? Go ahead, slap a little tariff on some Chinese goods in the name of protecting a favored industry. More generous pensions for teachers? Hey, it's only a few million tax dollars—and think of the kids, after all.

Individually, these things might sound fine. Multiply them and add them all up, though, and you have a system that most Americans manifestly oppose—one that creates a crushing burden of debt and teaches our children and grandchildren that government is the solution to all our problems. Seventy percent of us want stronger free enterprise, but the other 30% keep moving us closer toward an unacceptably statist America—one acceptable government program at a time.

Millions of Americans instinctively look to our leaders for a defense of our culture of free enterprise. Instead, we get more and more publicly funded gewgaws and shiny government novelties to distract us. For example, the administration stills touts the success of programs such as "Cash for Clunkers" in handing out borrowed money to citizens while propping up a favored industry. Yet Rasmussen found 54% of Americans opposed the program (only 35% favored it). Plenty of people may have availed themselves of that notorious boondoggle, but a large majority understand we were basically just asking our children (who will have to pay the $3 billion back) to buy us new cars—and that's not right.

More and more Americans are catching on to the scam. Every day, more see that the road to serfdom in America does not involve a knock in the night or a jack-booted thug. It starts with smooth-talking politicians offering seemingly innocuous compromises, and an opportunistic leadership that chooses not to stand up for America's enduring principles of freedom and entrepreneurship."

There are several things to admire about this editorial.

First, Ryan and Brooks explicitly acknowledge some role for government in maintaining minimal social programs for economic safety nets. They dismiss the notion of arbitrarily dissolving existing social compacts unilaterally. But they do shine a bright spotlight on the process by which "smooth-talking politicians" rob us of liberty, one expensive program at a time.

Second, the authors note the continuing contradiction between the ever more-expensive welfare state that federal legislators are giving voters, and the voters' own preference for just the opposite.

Third, they make a very clear example of what folly programs like "Cash for Clunkers" was. They note that it simply borrowed money from foreigners, to be repaid by our children, so that some Americans could get a better deal on a car last year.

Looked at in the aggregate, recent creeping socialism by both parties in Washington is easily seen through the lens of Ryan's and Brooks' prose.

They are right to call this coming mid-term election a critically important one for voters. They can explicitly choose to remain on the path to socialism, or to stop and retrace the nation's steps toward a society of greater opportunity and freedom.

Monday, September 13, 2010

Rattner On Wonderboy's GM & UAW Bailout

This weekend's edition of the Wall Street Journal contained an abstract of Wonderboy's 'car czar, Steve Rattner's, new book about the bailout of GM and the rape of US bondholders.

I won't bother supplying the book's title, for reasons I'll explain shortly.

Though the Journal article is a full two pages, I could only stomach about half of it. Rattner nearly breaks his arm patting himself and other administration flunkies, Rahm Emanuel and Wonderboy on their collective backs for their needless and mistaken "overhaul" of this sector.

What was really nauseating for me was Rattner's presumption that the federal government could and should have been meddling in industrial policy and the choosing of winners and losers in the GM and Chrsyler debacles.

On the way through, Rattner selectively quotes people like Wonderboy and Emanuel to the effect that they really, really thought about letting GM and the UAW founder and lose their investments or assets. Of course, we don't know if the quotes are true, and the article notes that Emanuel's representative has actually denied them.

But the overall picture painted of Wonderboy's transition team auto follies both sickens and scares me. Rattner admits that his boss' own selectively-enforced ethics rules prevented the auto team from actually hiring anyone with significant, relevant auto sector experience. Still, they plunged ahead, violating standing contracts of bondholders and arbitrarily rewarding UAW members with other peoples' assets.

This is one book I won't ever be buying. I'd rather not enrich Rattner in that manner. However, the excerpt alone is enough to justify being scared of every economic move this deeply flawed and inept administration makes.