For those of you who believe that you can spend yourself out of debt and enjoy the same level of taxation, a little dose of economic cold water is in order, appropriately on the day after tax day.
Many economists, including some who voted for Obama, do not believe that he can indefinitely avoid imposing tax increases much further down the income scale — on the middle class.
“You just simply can’t tax the rich enough to make this all up,” said Martin A. Sullivan, a former economic aide in the Reagan administration who said he backed Obama last fall.
“Especially just for getting the budget to a sustainable level, there needs to be a broad-based tax increase,” said Sullivan, now a contributing editor at Tax Analysts publications. “If you want to do healthcare on top of that, almost certainly, it just makes [a middle-class tax increase] all the more certain.”
And toss a little “cap-and-trade” on top of that, and whoa Nellie, the sky is the limit when it comes to the taxation necessary to support all of that.
How about those that believe that taxes should be used for “income equality” (also known as “tax the rich”)?
But even economists sympathetic to tackling income inequality say it will be difficult to avoid other tax hikes.
“There’s no way we’re going to be able to pay for government 10, 20 years from now without coming up with a new revenue source,” said Leonard Burman, director of the Tax Policy Center, during a forum on Obama’s tax proposals earlier this month.
Burman said a value-added tax is “inevitable.” Burman, deputy assistant Treasury secretary during the Clinton administration, said Obama should consider using revenue from the broad-based VAT to fund his healthcare plan. That would give middle-class and lower-income people incentive to keep taxes and health costs low, he said.
Translation for those who didn’t pick up on Burman’s last point – the “incentive” provided by the VAT (or Value Added Tax) is it will discourage “middle and lower income people” from using the medical system thereby keeping “health costs low”. If you want the real short version – rationing by price, the price being the cost of a visit plus the tax. Naturally, as a percentage of income, that would hit the middle and lower income levels much harder than the higher income levels.
And that 95% tax cut for Americans?
The president’s overall tax proposals, including perpetuating most of Bush’s tax cuts rather than allowing them to expire, will lead to $3 trillion in lost tax revenue over the next decade, according to an estimate by the Joint Committee on Taxes, which provides independent projections to congressional tax writers.
So $3 trillion in lost tax revenue, but an increase in the debt and debt service requirements:
More revenue will be needed to service the growing national debt. Because annual deficits are expected to remain above $500 billion for the next decade, Sullivan expects debt payments to more than double, from about 1.2 percent of GDP to more than 3 percent.
What does that mean for that “permanent” tax cut for the 95%?
Obama’s budget proposed that his signature Making Work Pay tax credit be made permanent, but it was not included in either the House or Senate budget blueprints, partly because doing so would have increased the size of the deficit on paper.
Lies, damn lies and “permanent” tax cuts.
All the promises are BS, folks – and that’s not because I want them to be, its simply how the law of economics works. We will end up paying for all of this fiscal profligacy somewhere in the very near future. And anyone that says differently or promises otherwise is blowing smoke up your skirt.
A fairly clear statement of intent if you ask me:
Fiat would walk away from a tie-up with US carmaker Chrysler unless unions agreed to a new, lower wage deal, Sergio Marchionne, the chief executive of the Italian motor manufacturer, said.
In an interview with Canada’s Globe and Mail newspaper, Mr Marchionne said he would scrap the deal unless Chrysler unions agreed to match the lower costs of Japanese and German-owned plants in Canada and the US.
“Absolutely we are prepared to walk. There is no doubt in my mind,” Mr Marchionne said in comments published online. “We cannot commit to this organisation unless we see light at the end of the tunnel.”
So, UAW and associated unions, job or no job?
One of the things that seems peculiar to the left is the belief that diplomacy is the solution to everything. While I prefer that problems that are conducive to being solved by diplomacy receive the full diplomatic treatment, there are some problems, at least as they are defined, which don’t have a diplomatic solution.
That category would most likely include pirates in a failed state. That, however, is apparently not going to deter our new Secretary of State. Fresh from presenting a red “overcharge” “reset” button to the Russians and assuring the Chinese not to worry about us stressing those pesky human rights violations, Hillary Clinton has decided she’ll solve the Somali pirate problem – diplomatically.
“We need to bring 21st-century solutions to bear,” she said.
Her 21st solutions include:
Clinton said it may be possible to stop boat-building companies from doing business with the pirates.
Hmmm. Now I may be mistaken here but I was under the impression pirates were pretty well known for hijacking boats, not paying for them.
One element of her initiative, she said, is to “explore ways to track and freeze pirate assets.”
Again, I may be way off base here, but I was under the impression pirate ransom was paid in big, old, whopping bags of cash dropped on the deck of the ship from helicopters. I’m not sure how she plans on tracking, much less freezing that cash as I’m pretty sure the pirates most likely don’t seek out or use banks.
And her third 21st century solution? The good old 19th century meeting, talking and coordinating event:
The other element of the initiative include calling for immediate meetings of an international counterpiracy task force to expand naval coordination against pirates. She said federal agencies would meet Friday to review the problem and consider potential responses.
Yessiree, I feel all 21st century about these initiatives, if you define 21st century solutions as those which address problems they don’t seem to understand with “solutions” which don’t address them at all.
Oh wait, one more sure fire 21st century solution:
The administration plans to send an envoy to a Somali donors conference scheduled for next week in Brussels and will attempt to organize meetings with officials of Somalia’s transitional government as well as regional leaders in its semiautonomous Puntland.
Because that government and those regional leaders have been so successful in keeping piracy under control to this point.
So, let’s review – keep boat companies from doing business with pirates, track and freeze the pirate cash assets, talk amongst themselves and talk to powerless Somali leaders/government.
[HT: Scott Jacobs]
My latest Examiner column on how to turn the Tea Party movement into a bi-partisan success.
A little dissention in the IRS?
The Treasury secretary, who oversees the IRS, didn’t pay all his taxes. Neither did five other top nominees for the Obama administration, or their spouses.
Now, as Wednesday’s tax deadline looms, some Americans are wondering why they should comply with the arcane requirements of the Internal Revenue Service when top administration officials failed to do the same. Even some IRS employees are upset at what they see as a double standard.
The most criticized example has been Treasury Secretary Timothy Geithner, who admitted not paying $34,000 in payroll and Social Security taxes, saying his failure to pay was an oversight. Five other nominees disclosed similar tax issues, including one as recently as two weeks ago when Kathleen Sebelius, President Barack Obama’s pick for secretary of health and human services, admitted she didn’t pay $7,040.
“Our members are upset and angry,” said Colleen Kelley, president of the National Treasury Employees Union, referring to concern bubbling up within the IRS over unusually strict rules that can cost agents their jobs if they make a mistake.
Indeed – while the man who has Cabinet level authority over the IRS was essentially a tax cheat, IRS employees are held to a very strict standard concerning their taxes and returns:
In some cases, IRS employees have lost jobs for simply filing a late return or failing to report a few hundred dollars of interest income.
Of course, the union representing IRS workers doesn’t want to see Geithner or anyone else held to the same standard. Oh, no – instead they want those standards loosened:
In an interview Tuesday, Kelley said the Geithner case underlines the need for a change of the rules governing IRS employees.
“My issue is not that I want Geithner or anyone else punished,” Kelley said. “I want there to be a re-examination of the law that holds IRS employees to a separate standard: one in which a simple mistake can cost them their jobs with no right of appeal.”
Yup – again, something the Obama administration and some of our commenters don’t seem to understand – the essence of leadership is setting the proper example – not do as I say but not as I do. That “essence” is still missing from this bunch.
With apologies to Jeff Foxworthy, the Department of Homeland Security has apparently decided it is necessary to warn the nation’s law enforcement agencies about a new and growing threat – right-wing extremists.
For instance, you might be a right-wing extremist if you’re a member of any groups:
“…that are dedicated to a single-issue, such as opposition to abortion or immigration …”
The report, entitled “Right-Wing Extremism – Current Economic and Political Climate Refueling Resurgence in Radicalization and Recruitment”, doesn’t mention whether those who are on the left and dedicated to single-issues, such as support for abortion or unlimited immigration might be extremists as well.
You can read the report here. (pdf)
David Weigel of the Washington Independent has trouble understanding the right-wing outrage this report sparks:
Seriously, though, I struggle to find anything wrong in a close — not a willfully obtuse — reading of the report.
Well maybe it’s the little things, David – like the apparent belief by DHS that any problem brewing domestically will occur only on the right. And perhaps it is implication that soldiers are likely to succumb to the draw of radical right-wingers:
Returning veterans possess combat skills and experience that are attractive to rightwing extremists. DHS/I&A is concerned that rightwing extremists will attempt to recruit and radicalize returning veterans in order to boost their violent capabilities.
Of course they have to go back to the early ’90s and Timothy McVeigh to substantiate this claim. Apparently they’ve been unable to find any more recent possible problems on which to pin their caution. And of course they also use as intel a claim made on a white-supremacist web-site which claimed (without any proof) that “large numbers of potentially violent neo-Nazis, skinheads, and other white supremacists are now learning the art of warfare in the [U.S.] armed forces.”
Well, there you go!
My favorite “you might be a right-wing extremist if” moment came with this little tidbit from DHS:
Rightwing extremist chatter on the Internet continues to focus on the economy, the perceived loss of U.S. jobs in the manufacturing and construction sectors, and home foreclosures.
The “perceived loss of US jobs?!” Heh … well I guess we won’t need all of that ‘stimulus’ money for unemployment if they’re only perceived losses, huh? But look at the topics – “extremist chatter” focuses on “the economy … jobs … and home forclosures?” Heck, then half the news media is extremist. And we here at QandO fall into that camp. And that’s with a less than obtuse reading of the sentence above, wouldn’t you say, Mr. Weigel?
And of course, DHS covers guns, gun laws and the current gun buying spree in a rather amusing way:
Open source reporting of wartime ammunition shortages has likely spurred rightwing extremists—as well as law-abiding Americans—to make bulk purchases of ammunition. These shortages have increased the cost of ammunition, further exacerbating rightwing extremist paranoia and leading to further stockpiling activity. Both rightwing extremists and law-abiding citizens share a belief that rising crime rates attributed to a slumping economy make the purchase of legitimate firearms a wise move at this time.
So when you buy that gun and ammo, which is it? Is it because you’re a paranoid rightwing extremist or a law abiding citizen who thinks such a purchase is a “wise move at this time”? Only DHS knows for sure. But if you’ve happened to write about the “perceived loss of US jobs”, the economy or “home foreclosures” on the internet and are a military veteran, I imagine you can figure out into which category you fall (heh … me included).
And don’t you dare be a state’s rights guy who believes that the federal government should respect the 10th Amendment:
Rightwing extremism in the United States can be broadly divided into those groups, movements, and adherents that are primarily hate-oriented (based on hatred of particular religious, racial or ethnic groups), and those that are mainly antigovernment, rejecting federal authority in favor of state or local authority, or rejecting government authority entirely.
In all, DHS is convinced that the economic downturn along with the “historic Presidental election”, code for “hey, we elected a black guy”, ensures a return to the ’90s and the rise of skin heads and militias.
By the way, you weren’t supposed to know about any of this.
LAW ENFORCEMENT INFORMATION NOTICE: This product contains Law Enforcement Sensitive (LES) information. No portion of the LES information should be released to the media, the general public, or over non-secure Internet servers. Release of this information could adversely affect or jeopardize investigative activities.
In reality it contains a bunch of warmed over nonsense, conjecture and unsubstantiated cites from anonymous websites. But remember, don’t tell anyone in the media about this BS passed off as “Intelligence and Analysis” because if they ever got wind of it they’d conclude there was very little analysis or intelligence on display in the document – and we wouldn’t want to embarrass DHS, would we?
Hope and change.
Much of the left, Steve Benen serving as a perfect example, are missing an essential point about the tea parties planned around the country. They aren’t about the level of taxation now. Instead, those attending them understand that with the massive spending undertaken by the federal government and the massive amounts of currency pumped into the system by the Federal Reserve, taxes aren’t going to remain anywhere near where they are now, no matter what politicians promise.
Benen uses a recent Gallup poll which says people are mostly happy with the tax rates they now have in an attempt to portray the protesters as being out of touch and out of step with the mainstream:
The latest survey from Gallup shows these assumptions don’t seem to apply right now: “A new Gallup Poll finds 48% of Americans saying the amount of federal income taxes they pay is ‘about right,’ with 46% saying ‘too high’ — one of the most positive assessments Gallup has measured since 1956. Typically, a majority of Americans say their taxes are too high, and relatively few say their taxes are too low.”
The same poll found that 61% of Americans believe the income taxes they paid this year are “fair.”
This certainly isn’t the kind of public opinion landscape Republicans were hoping for. In order for conservative talking points on the economy to be effective, Americans have to believe the current tax rates are never “about right” and anything but “fair.” Broad satisfaction with taxes leaves Republicans with very little else to say.
I beg to differ (and it isn’t just “Republicans” involved in these protests). What it says is the Bush era taxes, the ones which resulted from a tax cut, are considered “fair”. That would mean, then, than any increase in taxes would be considered something other than “fair”. And anyone with enough intelligence to make toast should realize that the spending orgy we’ve seen in the last few months is something that will have to be “paid for” either through taxation or inflation (or both).
So when Benen says the following, he whiffs completely:
Indeed, the semi-official slogan of the Tea Baggers’ events tomorrow is “T.E.A.: Taxed Enough Already.” It was hard enough to make this argument shortly after the president signed the largest middle-class tax cut in history; it’s even harder in light of poll results like these.
“Taxed Enough Already” mirrors the poll. But unlike Bennen, who attempts to pawn off the “95% of Americans will receive tax cuts” nonsense as the reason for the satisfaction, the people showing up seem to understand the economics of the situation better than he does. Someone is going to have to pay for all this fiscal profligacy, and the protesters know exactly who those people are.
Thus the protests.
UPDATE: Benen still doesn’t get it. Referencing this post, he says:
I see. So, at some point in the future (we don’t know when), some politicians (we don’t know who) might find it necessary to raise taxes. Whose taxes would be raised? It’s too soon to say. How much would taxes go up? No one knows.
It helps, if you’re going to write about this stuff, if you keep up with what’s been going on. As we pointed out in another post on the Obama budget, you don’t even have to guess “how much” or whether or not it might be “necessary”, the budget answers those questions:
Against a baseline that assumes current law tax policy is extended, S. Con. Res. 13 raises taxes by $361 billion and allows for $1.3 trillion in additional tax increases. In addition their budget paves the way for additional tax increases from a proposed cap-and-trade tax in reconciliation.
And (making the point as to how the 1.3 trillion is raised):
Deficit Neutral Reserve Funds:
The Democrat budget includes 15 “reserve funds,” which essentially “phantom spending” policy statements that allow the majority to say that they would like to fund a certain initiative. The deficit neutral requirement associated with the reserve funds typically require that taxes be raised in order to pay for the new policy initiative. If all reserve funds were to be fully enacted, total spending would increase by $1.3 trillion, financed by tax increases or spending decreases.
Maybe Benen finds that acceptable, but obviously those protesting don’t.
He concludes with:
With this in mind, I can only conclude that the Tea Parties are the most forward-thinking political events in the history of the country.
Another whiff – all you have to do is read the budget proposal that was passed by Congress, Mr. Benen. It outlines the size and scope of those future taxes fairly specifically.
You have read it haven’t you?
If you look at the big picture, you realize that the pirates off the Somali coast are more of a nuisance than a problem. Estimates are that 25,000 to 30,000 ships per year transit the Gulf of Aden (headed for the Suez Canal) or the east coast of Somalia. The bulk, of course, go through Suez. The successful hijackings over a multi-year period have been very low in comparison. In 2007, for instance, there were 12 successful hijackings.
The area of ocean in which these events take place cover approximately a million square miles. Here’s a great map (pdf) which shows the areas and the incidents through 2007. Obviously the pirates can pick and choose where to strike while the navies of the world can only react and hope they are close enough to prevent the hijacking. That was demonstrated quite clearly in the latest hijacking of the US ship in which Capt. Phillips was taken hostage. It took hours for the USS Bainbridge to arrive on scene and the rescue was only effected because the skiffs the pirates had used had been destroyed and they were forced to use a lifeboat.
20 countries are now concentrating naval assets within the area, most concentrated in the Gulf of Aden. A coalition of nations commanded by a US admiral constitute Task Force 151 which is strictly an anti-piracy task force. TF 151 operates in the Gulf. China and Russia have also committed naval assets to the task but do so outside TF 151. They coordinate with the TF but only escort their country’s flagged ships.
With the amount of traffic which transits the area, it is obvious that no navy has the assets to escort all of the ships.
But there is a tool through which the TF can coordinate its efforts and ensure those ships which are most likely to be attacked have a safe passage. One of those tools is a website. There vessels transiting the area can register their vessel and alert the TF of their time of arrival in the area in which hijacking is most likely. There are also tips for the masters of vessels transiting the area, maritime intelligence reports and alerts.
Obviously with that number of ships transiting the area, some are more susceptable to attack than others. What type of ship are the pirates looking for? According to Admiral Terry McKnight, (pdf) the TF 151 commander, they’re looking for ships traveling under 15 knots and with a low freeboard with aids boarding. As Adm. McKnight says, those sorts of ships seem to scream “pirate, me, pirate me”. If the TF knows ships which fit this template are going to be transiting the region, they can arrange to group them with other ships, track their movement and arrange for that movement at a time when the pirates are less likely to be out hunting.
The pirates have also adapted their tactics, especially off the eastern shore in the Indian Ocean. As shipping has moved further and further off shore to avoid the skiffs employed to board them, the pirates began using “mother ships”. Those are larger ships which carry a number of skiffs and 10 to 20 pirates. This enabled the pirates to go further and further off shore to attack shipping.
As you’ll note on the map linked above, there are three major areas on the eastern shore (to include Mogadishu) where the pirates seem to be concentrated, one on the tip of the Horn of Africa and one on the north shore of Somalia on the Gulf of Aden. Admiral McKnight said that “99.99 percent” of the pirates they’ve run across have been exclusively Somali.
The question, however, is would a land-based military mission which attacked these centers of piracy successfully end the attempted hijackings?
In my opinion, probably not. To date the risk to reward has been so low that there is a seemingly endless supply of would-be pirates. And, as long as shipping companies are willing to pay the ransom when one of their ships is hijacked, it will, in relative terms, remain a fairly low-risk way of making huge sums of money. Shipping companies know the numbers and recognize that the real chance of hijacking is very low, relatively speaking, and seem to prefer to pay off the hijackers if their ship ends up hijacked. And, of course, they’re all insured, so that is also part of the equation.
While we may clean out the nests of pirates for a short time if we mount a military operation, I find it hard to believe that others won’t step in, adapt to the new reality (perhaps by moving their base of operations frequently) and again head out into the Gulf or Indian Ocean in search of easy prey.
Punitive military operations may be satisfying in some way but in reality I would think their effect would be a very short term one. Just like war against insurgents, war against the pirates will see a constant adaptation by the pirates to any tactics the military might use. But this isn’t a military problem – it is a failed state problem. The problems ashore – a failed government, abject poverty, and few choices for gainful and legal employment – are what must be solved if we hope to see piracy in that area defeated. Until they are solved, there will be plenty of eager replacements for whatever casualties we might inflict on the current pirates, and the attacks on shipping will continue.
Meanwhile, what can be done to make attacks on the high seas less likely? Well the obvious way is to arm the merchantmen. But for various and sundry reasons, most shipping companies don’t want to do that. They range from liability concerns, to concerns about essentially untrained crewman with weapons to concerns about gun laws in the various countries the ships go. We know there aren’t enough naval ships to escort each merchant ship, so options are limited. Some merchantmen have armed their ships with high-pressure water cannons which have succesfully thwarted a few pirate attacks.
What I expect to see offered soon, perhaps by Blackwater, now known as Xe, is rent-a-gun teams. For those that want them, a team is air-lifted to the ship as it enters the pirate zone and taken back off by air as they successfully exit the zone. I’m sure there are some legal and liability concerns there as well, but it may be one of those times when showing up at the rail and pointing a few automatic weapons at a very vulnerable skiff below you would be enough to disuade the would be pirates from attempting to board.
Food for thought.
What an absurd poll:
A new poll indicates Americans don’t agree with former Vice President Dick Cheney’s recent assertion that President Barack Obama’s actions have increased the chances of a terrorist attack against the United States.
This qualifies as “news”?
“A new poll indicates Americans don’t agree with Joe Blow that Obama’s actions against the Somali pirates increases the risk of attacks on American shipping”.
If you saw that, you’d think, “so, what do those who don’t agree actually know about the situation with the pirates off of Somalia?”
And you’d answer, “not much, so of what importance is their uninformed opinion and why is it being treated as news?”
That goes for this poll as well – the fact that those being polled are ignorant as to whether “Dick Cheney’s recent assertion” is true or not isn’t important.
Apparently what is important is what they believe to be true.
My latest Examiner column taking on the recently increased federal tobacco tax.