Free Markets, Free People

Monthly Archives: March 2009


Health Care Is Next – Will We Heed The Warnings?

As the Obama administration prepares to hold a health care summit, a reminder about involving the government too deeply in your health care decisions:

Thousands of patients with terminal cancer were dealt a blow last night after a decision was made to deny them life prolonging drugs. 

The Government’s rationing body said two drugs for advanced breast cancer and a rare form of stomach cancer were too expensive for the NHS. 

The National Institute for Health and Clinical Excellence is expected to confirm guidance in the next few weeks that will effectively ban their use. 

Note the bold term. Government rationing body. Doesn’t matter what you want or need or are even willing to pay for, does it? Denied with no recourse except to get on an airplane, fly to the US and pay for it yourself … if you can afford all of that. And what if there were no US to fall back on?

When the government owns the problem, rationing will be the result. Take a look around you and tell me what you see going on economically. What do you suppose, then, will be the case if the same sort of system exists here? How can it be any different?

And a side note about unintended consequences. If you were the CEO of the drug company that developed these drugs, would such development be a priority in the future? Right now you have the relatively free market of the US to sell such products in. And as they’re used and studied, even better drugs will result. But if that market dries up because government is unwilling to pay the price for newly and expensively developed drugs, what’s the incentive for you and your company to do so?

~McQ

[HT: Below The Beltway]


The Coming Tax On Everything

Over the past few days, I’ve been highlighting the fact that the promise of tax cuts for 95% of Americans is illusory at best. If your bottom line is net spendable income, then despite the Obama promise, you’re going to have less of it when all his plans for your income are passed into law. Or, as I’ve been pointing out, while he’ll make a big deal of the tax cut for the 95% on the one hand, he’ll be taking what he’s cut back and more with the other.

The Detroit News editorial board seems to have figured that out:

President Barack Obama’s proposed cap-and-trade system on greenhouse gas emissions is a giant economic dagger aimed at the nation’s heartland — particularly Michigan. It is a multibillion-dollar tax hike on everything that Michigan does, including making things, driving cars and burning coal.

Tell me – who is it that has been whining for years about losing manufacturing jobs to overseas competitors? Who has thumped the podium about “outsourcing”? Who has claimed to be the champion of the working man?

The same crew that wants to enact draconian taxes which will affect the very companies and jobs they claim they want to save or create. And while the companies will do all they can to pass on the cost to the consumer (thereby negating any tax cut), they will have to absorb some of the cost to stay competitive.

Doing so will drive up the cost of nearly everything and will amount to a major tax increase for American consumers.

Or companies can go to countries who don’t have cap-and-trade laws such as China and India and set up there. Of course if they do, they’ll be called “unpatriotic” and the government who forced the issue will declare them the problem.

And the net result?

The proposed tax would take effect in 2012 and has the very real potential to throw the nation back into recession, if indeed the expected recovery has arrived by then. It’s impossible to raise costs for such basics as manufacturing and energy production by more than half a trillion dollars over a decade and not have the effects felt across the economy.

Economic common sense. But you see, the 2012 effective date is a result of political calculation. If we are seen to be climbing out of the recession by 2011, most likely the Obama administration will get a second term. After that they couldn’t care less how they or their policies are viewed. And it is far enough from 2016 that they think it may be politically survivable for the Democrats.

However it also means that if the GOP starts hammering on this now and making the same sense the Detroit News editorial board is making, there’s a chance they can use it as an issue to try to recapture power. That assumes, of course, they have the smarts and the spine to stand up, make the consequences known and ensure they frame the argument instead of letting the Democrats spin it away.

How likely is that?

Oh, and just for the record:

A similar program in Europe hasn’t worked. European automakers complained about carbon dioxide limits the European Union proposed in 2007 as damaging to the economy.

Ya think?

~McQ


Jobs, Jobs, Jobs …

Or not.

What is something you probably shouldn’t do if you want to see an industry “save or create” jobs?  

Increase their costs?

U.S. oil and natural gas producing companies should not receive federal subsidies in the form of tax breaks because their businesses contribute to global warming, U.S. Treasury Secretary Timothy Geithner told Congress on Wednesday.

It was one of the sharpest attacks yet on the oil and gas industry by a top Obama administration official, reinforcing the White House stance that new U.S. energy policy will focus on promoting renewable energy sources like wind and solar power and rely less on traditional fossil fuels like oil as America tackles climate change. 

Got that? They shouldn’t get tax breaks because they “contribute to global warming”. Freakin’ incredible. An ideological reason given to deny tax breaks. Here’s government again picking winners and losers.

The Obama administration’s budget would levy an excise tax on oil and natural gas produced in the Gulf of Mexico, raising $5.3 billion in revenue from 2011 to 2019.

And in a time of financial crisis, that cost will be passed on to whom?

Obama’s budget would also place a $4 per acre annual fee on energy leases in the Gulf that are designated as nonproducing. The budget proposal projects the fee would generate $1.2 billion from 2010 to 2019.

Of course, they’re talking millions of acres out there. As Sen. Cornyn points out, it won’t be the ExxonMobile’s or the Chevrons which will be hurt by this:

Senator John Cornyn of Texas criticized the tax increases, saying they would hurt independent energy companies that provide a large share of U.S. oil and gas supplies.

“My view is that higher taxes on small and independent producers here in America will make us more dependent on imported oil and gas while we transition to cleaner energy alternatives, a goal we all share,” said Cornyn. “And it will also hurt job retention and job creation in the energy sector, which provides an awful lot of jobs in this country.”

Pure brilliance.

Yup – it’s all about “saving or creating” jobs – if government approves.

~McQ


When “Waste” Isn’t Waste

When it comes to military procurement, President Obama says:

“I reject the false choice between securing this nation and wasting billions of taxpayer dollars,” Obama said on a day when he signed a presidential memorandum reforming the contracting system across the entire government.

But when it comes to a spending bill with 9,000 earmarks?

*crickets chirping*

Democratic Senator Evan Bayh calls it what it is – wasteful spending.

Where’s the presidential leadership on this?  If there’s waste in the procurement system and that’s a target, why isn’t waste in the spending bill also a target?


Let Them Buy Stock

While stocks are tanking, partially due to uncertainty and skepticism over President Barack Obama’s economic agenda, the president encouraged people to invest:

As Wall Street tumbles, President Barack Obama offered up some investing advice on Tuesday, telling a wary nation that stocks are becoming a “a potentially good deal” for those willing to think long term. The White House later cautioned people not to read too much into the statement.

Obama also said he will not base policy on what he called the “day-to-day gyrations of the stock market.” The Dow Jones industrial average fell again Tuesday after plunging on Monday to it lowest level in more than 11 years.

The index has lost more than half its value since a record peak in October 2007. The toll on retirement plans, college savings and nest eggs has been huge.

“You know, the stock market is sort of like a tracking poll in politics,” Obama said during an appearance with British Prime Minister Gordon Brown. “It bobs up and down day to day, and if you spend all your time worrying about that, then you’re probably going to get the long-term strategy wrong.”

Yet lately, Wall Street’s direction has been down, period. Investors are in despair over the state of financial companies, the deepening scope of the recession and doubts about the government’s various attempts to bolster the banking sector and create jobs.

Talk show host Neal Boortz responded with this:

Is he kidding? He’s waging an all-out war against capitalism, and he wants us to buy stocks? This man who wants a government-controlled economy wants us to invest in the stock market? This is like the Surgeon General telling us to go out and have unprotected sex with drug addicted street walkers. Yeah … let’s all do that!

No doubt that stocks may improve in the future, but economic forecasts aren’t that great in the long term, considering the amount of debt being piled up and unfunded liabilities from entitlements.

And who wants to be an investor when they constantly have a target painted on their backs by politicians who make class warfare the focal point of their economic agenda?


Geithner defends tax increases

Tax cheat Timothy Geithner is defending President Barack Obama’s proposed tax increases:

President Obama’s Treasury secretary is defending proposed tax increases, saying they are necessary to limit future budget deficits.

Timothy Geithner responded on Wednesday to Republican criticism that the administration wants to increase taxes during a recession. Geithner noted that tax increases on couples making more than $250,000 per year would not take effect until 2011.

Obama inherited a $1.3 trillion budget deficit that is expected to balloon to $1.75 trillion this year. Obama says his plan would reduce the deficit to $533 billion in four years.

Don’t you love how they act like the only way to cut the deficit is to raise taxes. I guess it’s too much to ask to just reduce spending to cut the deficit.


Petard. One Each. Hoist When Ready …

Do you like the thought of “pollution free power?”

Yeah, me too. That’s why I like nuclear power and processing the waste as France does (yeah, yeah, even a blind pig finds an acorn, ok?).

But I also want my “pollution free power” to do two things – be consistent in its output and not kill thousands of bats and birds.

Heh … yes friends the latest obstacle the “wind power” advocates have to overcome are -wait for it- environmental activists.

Wind-energy programs in New York – including a developer’s plan to build the city’s first wind farm at Staten Island’s mothballed Fresh Kills landfill – are tied up in red tape because their projects will endanger bats, birds and other wildlife, The Post has learned.

The nocturnal flying mammals are getting slaughtered because they have a strange habit of flying into the blades of wind turbines during the warm spring and summer months, operators and wildlife advocates said.

“An energy source simply cannot be ‘green’ if it kills thousands upon thousands of bats,” said Bat Conservation International.

Moonbat Dream Killers

Moonbat Dream Killers

Uh, no, it can’t. So, if fish can hold up dams and marsh rats can hold up developments, certainly the lives of “thousands upon thousands” of bats are worthy of saving.  We have to stop this unmitigated slaughter by those brutish wind turbines. – I mean if everyone is going to be consistent about all of this.

[As an aside, can you think of better spokes person for the Bat Conservation International than Gotham's favorite bat?]

Staten Island Borough President James Molinaro blasted a city Parks Department report that raised objections about the proposed Fresh Kills wind farm. The study warned of “significant adverse impact to birds and bats.”

Molinaro said the city study even complained the 460-foot turbines would impact insects.

“Can you imagine that? They’re worried the turbines would kill too many mosquitoes,” he fumed. “We want to kill mosquitoes! The city spends lots of money each year to kill mosquitoes because they carry the West Nile virus.”

Er, Mr. Molinaro, can you guess what bats and birds feed on? In fact the bats ingest about 600 mosquitoes an hour.

There are those who say bats and windmills can coexist:

He conducted a study that found that lowering the speed of wind turbines or shutting them down during “low-wind” nights reduced bat fatalities by 82 percent at a Pennsylvania facility.

Shutting them down, eh? You sure generate a lot of power when they’re in that state don’t you?

But the bats, and activists, are happy.

The point? Getting solar and wind power on-line isn’t going to be any easier than any other power source the environmentalists take a dislike too. If you think, for instance that the enviros are going to let someone carpet the Mojave Desert with solar panels, you’d probably believe that Tim Geithner made a “mistake” on his taxes.

And even if you can get past the enviros and their law suits every step of the way, there are right of ways to attempt to purchase, permits, regulations, etc all of which have to be met and/or accomplished before the first kilowatt of power courses from any of these facilities (providing its a windy day and the bats are asleep). Anyone who thinks this is a quick and easy process on the road to pollution free energy independence just hasn’t been paying attention.

~McQ


Math is Hard

Idon’t make any claim to being a math whiz, Michael’s kind comments of earlier today notwithstanding.  Throw calculus at me, for instance, and I’m just lost.  But, I do have a rather decent grasp of basic addition and subtraction, so I’m wondering how to parse this sentence from a Politico story on the Obama Administration and immigration.

Of all the students in 2005 who spoke a language other than English at home, 69 percent were Hispanic, 64 percent were Asian, and 31 percent were Pacific Islanders, according to the National Center for Education Statistics.

I think that comes out to 164%, doesn’t it?


The “Deregulation” Bogeyman

As Dale has mentioned before, ginning up support for massive federal expenditures and deepening deficits was much easier for FDR because he had Nazis. Obama does not have any such luxury, so he has to invent an equivalent enemy. Luckily for him, decades of propaganda have cemented the idea into many heads that capitalism=rightwing=nazi, leading to the inexorable conclusion that anyone or thing whose primary purpose is to make profit is dangerous and must be controlled.

Dovetailing nicely with that need is the meme that deregulation is to blame for the current financial mess. Although it’s a fairly ridiculous claim (as I’ve pointed out before), that won’t stop “studies” like this from being published and reported on:

$5 BILLION IN POLITICAL CONTRIBUTIONS BOUGHT WALL STREET FREEDOM FROM REGULATION, RESTRAINT, REPORT FINDS

Steps to Financial Cataclysm Paved with Industry Dollars

March 4 – The financial sector invested more than $5 billion in political influence purchasing in Washington over the past decade, with as many as 3,000 lobbyists winning deregulation and other policy decisions that led directly to the current financial collapse, according to a 231-page report issued today by Essential Information and the Consumer Education Foundation.

The report, “Sold Out: How Wall Street and Washington Betrayed America,” shows that, from 1998-2008, Wall Street investment firms, commercial banks, hedge funds, real estate companies and insurance conglomerates made $1.725 billion in political contributions and spent another $3.4 billion on lobbyists, a financial juggernaut aimed at undercutting federal regulation. Nearly 3,000 officially registered federal lobbyists worked for the industry in 2007 alone. The report documents a dozen distinct deregulatory moves that, together, led to the financial meltdown. These include prohibitions on regulating financial derivatives; the repeal of regulatory barriers between commercial banks and investment banks; a voluntary regulation scheme for big investment banks; and federal refusal to act to stop predatory subprime lending.

The quote above comes directly from the report’s financial backers, Essential Information and the Consumer Education Foundation. The former is a non-profit that was created by Harvey Rosenfield, a lawyer who also controls the advocacy group Consumer Watchdog, formerly known as the Foundation for Taxpayer and Consumer Rights. The latter is an entity created by Ralph Nader. None of that information is found either in the press release, or in the news stories reporting on (i.e. quoting) the release.

The Hill reports:

The organizations are a nonpartisan, nonprofit advocacy groups which push for stronger consumer protection laws and to curb “excessive corporate power.”

The report alleges that excessive deregulation of the financial sector combined with undue influence from the billions spent in lobbying and political contributions resulted in the current financial crisis.

And CBS’ Political Hotsheet finds:

The two men behind the report are California lawyer Harvey Rosenfield of the nonprofit Consumer Education Foundation and Robert Weissman of Essential Information, a Washington nonprofit “that seeks to curb excessive corporate power.”

The report argues that the lobbying and contributions kept financial derivatives from being regulated, led to the repeal of regulatory barriers between commercial banks and investment banks and kept the government from stepping into halt predatory subprime lending.

The remainder of the reporting is merely quoting and paraphrasing the press release. Absolutely zero analysis of the actual report is offered. Why would they report anything else? Well, just looking at the press release provides one clue:

Financial deregulation led directly to the current economic meltdown. For the last three decades, government regulators, Congress and the executive branch, on a bipartisan basis, steadily eroded the regulatory system that restrained the financial sector from acting on its own worst tendencies. “Sold Out” details a dozen key steps to financial meltdown, revealing how industry pressure led to these deregulatory moves and their consequences:

1. 1. In 1999, Congress repealed the Glass-Steagall Act, which had prohibited the merger of commercial banking and investment banking.
2. Regulatory rules permitted off-balance sheet accounting — tricks that enabled banks to hide their liabilities.
3. The Clinton administration blocked the Commodity Futures Trading Commission from regulating financial derivatives — which became the basis for massive speculation.
4. Congress in 2000 prohibited regulation of financial derivatives when it passed the Commodity Futures Modernization Act.
5. The Securities and Exchange Commission in 2004 adopted a voluntary regulation scheme for investment banks that enabled them to incur much higher levels of debt.
6. Rules adopted by global regulators at the behest of the financial industry would enable commercial banks to determine their own capital reserve requirements, based on their internal “risk-assessment models.”
7. Federal regulators refused to block widespread predatory lending practices earlier in this decade, failing to either issue appropriate regulations or even enforce existing ones.
8. Federal bank regulators claimed the power to supersede state consumer protection laws that could have diminished predatory lending and other abusive practices.
9. Federal rules prevent victims of abusive loans from suing firms that bought their loans from the banks that issued the original loan.
10. Fannie Mae and Freddie Mac expanded beyond their traditional scope of business and entered the subprime market, ultimately costing taxpayers hundreds of billions of dollars.
11. The abandonment of antitrust and related regulatory principles enabled the creation of too-big-to-fail megabanks, which engaged in much riskier practices than smaller banks.
12. Beset by conflicts of interest, private credit rating companies incorrectly assessed the quality of mortgage-backed securities; a 2006 law handcuffed the SEC from properly regulating the firms.

The damning list offers only one instance of actual deregulation (the Glass-Steagall Act), at least seven instances of regulation that the authors simply disagree with (nos. 2-5, and 8-10), one claim each of “global regulators” and ratings agencies failing to do their respective duties (nos. 6 and 12), and two allegations that federal regulators didn’t pursue their jobs aggressively enough (7 and 11). So, despite the bold claim that “Financial deregulation led directly to the current economic meltdown,” the authors produce almost no evidence to support their conclusion.

It seems like that may have been a little more newsworthy than simply regurgitating the press release.

Then there is the fact that a Ralph Nader organization is partly responsible for the funding. Not only has the man run for president four times, one of those times perhaps leading to the election of George W. Bush, he’s notorious for his left-wing politics, including having a serious distaste for corporate America and capitalism.

Could be relevant, no?

But the real failure of journalism here was to take anything that Harvey Rosenfield has to say at face value.

The Foundation for Taxpayer and Consumer Rights (FTCR) [owned by Essential Information creator, Harvey Rosenfield] has decided to re-brand itself as “Consumer Watchdog.” Will a simple name change help shore-up the eroding reputation of this “consumer group?”

Few days pass without someone from FTCR pontificating in a newspaper story or TV report. Agents of this organization often are quoted — without explanation of their credentials — about auto, fire or health insurance, gasoline pricing, stem-cell research, or just about any public policy debate on the FTCR’s mind.

[...]

Behind the pithy quotes from FTCR’s leaders lies an organization with too much to hide and too many faults to be taken seriously anymore. It has survived by quietly pocketing millions of dollars in fees stemming from an initiative it wrote and sponsored nearly two decades ago. Along the way, it has engaged in hypocritical and speculative stock trading, enjoyed the secret patronage of wealthy trial donors, and either cozied up to or bullied politicians. All of this came despite operating under IRS rules as a “public-benefit” charity.

[...]

Of course, the public has no idea what is really motivating FTCR because its agents refuse to disclose their financial backers. Their reasons for hiding the facts are insulting to the average Californian’s intelligence.

FTCR declined to release a list of donors on its website by ludicrously equating their work to the civil rights movement in the South. It’s refusal to list details about its financial backers is particularly galling since FTCR spends a lot of time lambasting politicians for alleged corruption surrounding their own political donations.

One source of income is clear, thanks to some available public disclosure forms. Following the disastrous 1994 Northridge earthquake, founder Rosenfield extracted $5 million in a consumer-protection settlement with Allstate Insurance. The money was placed in a new group he controls, the Consumer Education Foundation, which was supposed to prevent the kinds of insurance disasters that followed the Northridge quake.

But nearly a decade after the group was formed, its biggest accomplishment appears to be paying Rosenfield a $100,000 salary and writing a few grant checks … including to Rosenfield’s own FTCR, to fund its operations. One wonders what the judge in the Allstate settlement would think about this cozy relationship, let alone why Northridge consumers have yet to see much benefit from the $5 million that was paid out supposedly for the public good.

It gets even more absurd.

Rosenfield’s Consumer Education Foundation invested some of its Northridge windfall in Enron stock — the Texas company that bilked California consumers out of billions of dollars. This laughable investment, which the CEF was forced to reveal in disclosure statements, is almost too incredible to believe. The “consumer” foundation put its money in one of the biggest consumer ripoff companies in U.S. history.

Enron wasn’t the only hypocritical stock purchase made by the Rosenfield’s Consumer Education Foundation. The group purchased stock in Abbott Labs, Amgen, Merck, Pfizer, Idec Pharmaceuticals, Johnson and Johnson, and Proctor and Gamble. Meanwhile, FTCR would soon get busy lambasting politicians for accepting campaign donations from these same companies. And while FTCR has lashed out at automobile and chemical companies, the “consumer” foundation has invested in Clorox, DuPont, General Motors, Ford Motors, and Toyota Motor Credit.

There’s more on Rosenfield’s endeavors here (scroll through the comments to the ftcrfollies.org stuff), but the original site is now defunct, so caution is warranted.

In any case, it seems that Rosenfield’s alleged background as an agent provocateur should raise enough red flags to warrant at least a mention that perhaps the report he’s funded (written?) should be taken with a grain of salt. Instead, we get news stories that basically repeat exactly little more than the juiciest allegations from the press release, absolutely zero analysis of the actual report (or the press release for that matter), and nothing more than the bare bones information regarding the provenance of the report.

With apologies to Mike Judge, “What would you say ya do here, MSM?”


Tax the Rich and What Do You Get?

Another day older and deeper in debt. Of course, that’s because you plan to spend $3.6 Trillion on budget over the next year.

WASHINGTON – President Obama laid out his first budget plan, a bold $3.6 trillion proposal that would transfer wealth from rich taxpayers to the middle class and the poor, and predicts a stunning federal deficit of $1.75 trillion this year – nearly four times last year’s record.

Obama blamed the expected federal deficit explosion on a “deep and destructive” recession and recent efforts to battle it, including the Wall Street bailout and the $787 billion stimulus plan.

[...]

Among the budget proposals, the plan would:

extend a $400 tax credit for most workers while letting expire former President George W. Bush’s tax cuts for couples making more than $250,000 a year. The budget contains almost $1 trillion in tax hikes over 10 years on individuals making more than $200,000 and couples earning more than $250,000;

close tax loopholes for the wealthy to raise $318 billion toward a down payment on Obama’s universal health care plan;

clamp down on the Pentagon budget, which would get a 4 percent boost next year, but would then get increases of 2 percent or less over the next several years;

make permanent the expanded $2,500 tax credit for college expenses;

spend more than $6 billion on cancer research at the National Institutes of Health next year, a 15 percent hike;

spend $3.9 billion to improve the nation’s sewage treatment plants and drinking water systems; and

raise $15 billion a year, beginning in 2012, from auctioning off carbon pollution permits to help develop clean-energy and renewable-energy technologies. The administration “will work expeditiously” to get Congress to approve an 83 percent reduction in global warming emissions by mid-century. There’s also more money at NASA for space-based monitoring of greenhouse gases.

sisyphus
After reviewing some of the comments from those intended to be taxed, as well as some of the criticisms of those taxpayers’ intelligence [as an aside, I think the liberals denouncing both the story and the interviewees are playing a little fast and loose with the assumptions, since the taxpayers displayed no misunderstanding of marginal rates, and voiced concerns solely based on principles], I got to thinking about how much money will this proposed tax hike really raise. This seems important, not only because of the size of proposed budget, but also since a common refrain from those in favor of letting the top rate snap back to 39.6% (from the current 35%) is that it will only cost those taxpayers 5 cents on the marginal dollar, which is very little to worry about much less enough to change behavior, or so the argument goes.

Before looking at the actual numbers, let’s get something straight first. While it is accurate to say that raising the top rate only costs these taxpayers a nickel per extra dollar earned, that is not all that is being proposed. These taxpayers will also be losing deductions and credits that they would otherwise have, as well as paying extra taxes on anything subject to cap-and-trade taxes, should that lovely piece of legislation be passed. Moreover, if you truly believe Obama when he says that those with incomes less than $250,000 per year will receive a tax cut, then it seems ludicrous to pretend that at least some, if not virtually all, of those taxpayers near the margin will change their working behavior so as to be in the benefit group rather than the extra-taxed one.

Nevertheless, for purposes of calculating the expected tax revenues generated under this plan, I’m going to assume that nobody changes their behavior in the slightest (i.e. everyone earns as much taxable income as possible), and that the number of taxpayers and the amount of taxes paid largely mirrors the 2006 numbers (which is the most recent data available).

According to IRS figures [xls], about 50% of all taxable income came from the $200,000 and above earners in 2006. By my calculations that came to $2.056 Trillion dollars in taxable income from 3,847,241 taxpayers (about 9% of all returns). This cohort paid approximately $522 Billion in taxes, or about 62.4% of the total $837 Billion in tax receipts. These are the people upon whom the new burden will be placed according to President Obama.

In order to figure out how much taxable income is above $200K (there is no breakout for $250K and above), I took all of the taxpayers in the $200K to infinity range (3,847,241) and multiplied it by 200,000 (= 769,448,200,000).

I then subtracted that number from the (rounded) total of taxable income for the same range (@ $2.056 Trillion), and got $1,286,551,800,000. If I thought about it correctly, then that should be the amount of taxable income above $200K.

I then took my above-$200K number and multiplied it by 5 cents, figuring that the increase in marginal rate of 4.6% would lead to about a nickel per taxable dollar earned in new revenues, if everything were to remain static.

From all of that I figured that approximately $64.3 Billion in new taxes would be raised by the new tax hike … to cover a $3.6 Trillion budget.

I sent my calculations to Dale, who became so engrossed in the matter that he put together an entire spreadsheet figuring the numbers in not one, not two, not three, but in six different ways. I realized later that asking Dale to check out my math was rather like standing on one foot and excitedly calling attention to my “skill” while in the midst of an acrobat convention.

Anyhoo …

After Dale played with the numbers [xls] for awhile, he arrived generally at the conclusion that the absolute most that could be raised was in the neighborhood of $85 Billion, and at worst around $55 Billion. On average, Dale calculated that approximately $65 Billion was the likely amount of new tax revenue that could be expected if all payers in the 2006 cohort behave exactly as they did then. Sticking with the metaphor, “Yes, Michael, that’s a decent one-legged stand you have there.”

In short, a complete klutz has a better chance of joining the Flying Wallendas than the bottom 95% of taxpayers do of getting a tax cut. Instead, they will all see a significant tax hike, whether in their marginal rates, in excise taxes, corporate taxes, fuel taxes, or other forms of indirect taxation. And as those taxes begin to mount up, and the national debt does it’s best imitation of the Challenger, people will work and produce less and less, and tax revenues will dry up.

That is the plan for our recovery. Read it and weep.