Free Markets, Free People

Monthly Archives: April 2010


Why Obama is appealing for help

In a video to supporters, President Obama made the following statement:

“It will be up to each of you to make sure that the young people, African Americans, Latinos and women, who powered our victory in 2008 stand together once again,” he said.

“If you help us do that — if you help us make sure that first-time voters in 2008 make their voices heard again in November — then together we will deliver on the promise of change and hope and prosperity for generations to come,” he said.

He’s caught a lot of crap for that statement, with a some claiming it is racist. It’s not. It’s a demographic appeal citing areas where he and Democrats think they’ve lost a significant amount of support, or, if not support, at least the energy that turned those demographic groups out in the large numbers necessary to give he and the Democrats the margin of victory.

Now, there are a lot of forces working against an energized electorate on the Democratic side of the isle, but Ron Bonjean of USN&WR brings us nice little summary of the facts confronting them as it pertains to these particular groups:

* The Bureau of Labor Statistics reported that African-American unemployment jumped to 16.5 percent in March, up from 15.8 percent in February. Hispanic unemployment rose to 12.6 percent. These numbers are much higher than the nation’s unemployment rate, which still hovers at 9.7 percent.

* America’s young workers haven’t seen positive change. According to a report by the Economic Policy Institute, one of these groups is workers age 16-24, whose unemployment rate peaked at 19.2 percent. And African-American 16-24 year-old workers had the highest rate, starting 2010 at 32.5 percent, followed by Hispanics at 24.2 percent.

* The percentage of investments made by the Small Business Administration supporting Small Business Investment Companies in minority-owned firms has dropped from 26 percent in 1998 to about 7 percent today.

* Some 80 percent of Hispanic seniors making less than $20,000 per year were enrolled in a Medicare Advantage program, according to 2007 data–and yet the Obama healthcare law cuts $132 billion from this program. A Medicare analysis released last week shows at least half of all Medicare Advantage enrollees will lose their plan, while others will see higher premiums and lower benefits.

And now we have the immigration issue reigniting with little prospect of seeing anything meaningful being done this year.

The voting blocs Obama is addressing in his quote were critical to is success in ’08. With this down economy and the facts above arrayed against them, they’re very aware of their problems. As a White House press office official said:

“The President’s view is that good policy is good politics.”

But as Ron Bonjean adds:

Failed promises to pass policies to create conditions for higher income, more jobs, and better health care coverage will likely lead to a massive failure of turnout for Democrats at the polls.

And at the moment, the Democrats are knee deep in failed promises – a condition that usually seriously dampens voting ardor.

~McQ



When are sanctions not sanctions?

When enforcement is an option, I suppose.  Tell me how brilliant this is:

The Obama administration is pressing Congress to provide an exemption from Iran sanctions to companies based in “cooperating countries,” a move that likely would exempt Chinese and Russian concerns from penalties meant to discourage investment in Iran.

[...]

The “cooperating countries” language that the White House is pressing would allow the executive branch to designate countries as cooperating with the overall strategy to pressure Iran economically.

According to three congressional staffers familiar with the White House proposal, once a country is on that list, the administration wouldn’t even have to identify companies from that country as selling gasoline or aiding Iran’s refinement industry.

Even if, as current law allows, the administration can waive the penalties on named companies for various reasons, the “cooperating countries” language would deprive the sanctions of their “name-and-shame” power, the staffers said.

The bill in committee now doesn’t have this provision.  Essentially what this amounts to is the administration saying “if you’ll sign on to the sanctions (against the importation of gasoline), we won’t enforce them” to “cooperating countries”.  Pure symbolism over substance.

“We’re pushing for a ‘cooperating-countries’ exemption,” the White House official said. “It is not targeted to any country in particular, but would be based on objective criteria and made in full consultation with the Congress.”

Mrs. Ros-Lehtinen, however, said the exemption “is aimed at China and Russia specifically.”

“The administration wants to give a pass to countries for merely supporting a watered-down, almost do-nothing U.N. resolution,” she said.

This isn’t coherent foreign policy – this is pure politics mostly designed for domestic consumption.  This is about the ability to claim to have made progress against Iran by rallying the rest of the world to our side and imposing “tough new sanctions” via the UN when the intent is to never enforce them.

Of course Iran hasn’t been idle either.  They’re not doing “in-kind” bartering with regional neighbors which circumvents any sanction regime.  Swap oil for refined petroleum products and they’re not liable to such sanctions.  And of course Hugo Chavez and others in the socialist South American cabal have also said they’d ignore such sanctions anyway.

Last, but certainly not least, a gasoline sanction hits those that can’t afford it the most the hardest in Iran.  The regime?  It will always have plenty of gasoline.  The poor Iranian trying to feed his family – not so much.

Instead of playing these sorts of games, which are clearly doomed to failure (or irrelevance), maybe it’s time to reconsider putting back on the table some of the options the administration unilaterally took off the table last year.

~McQ



 


The coming backlash against the backlash? (update)

Reuters dutifully reports that the Arizona immigration law has “energized Democrats and Hispanics”. Reuters adds that both are “furious” about the bill and there are plans afoot to have massive May Day rallies in 70 cities. Calls for boycotts against the state are rising. Says one Democratic Representative:

“What Arizona has done is that it has galvanized, united, fortified, focused our immigration movement,” Democratic Representative Luis Gutierrez declared at the news conference.

Well, it may have done precisely that – but it may also end up  with those who supported the bill just as  “galvanized, united, fortified and focused”.  Because also noted in the article is a poll which says 64% of those in the state support the bill. We’ve heard from a few of them here.  And they’re pretty stirred up about all of this.   My guess is – and it is only that at this point – that the poll isn’t too far off from what might be found nationally.

If that’s the case, the possibility exists that the upcoming and promised “massive” demonstrations may have the same effect on supporters of stronger immigration laws such as Arizona’s to become just as energized as Gutierrez believes the law has done for the opposition.

Recall, if you will, the last time large rallies were held to protest the enforcement of immigration laws. While they were quite a spectacle, they didn’t quite have the effect for which supporters hoped. They certainly increased the visibility of the problem, but they also saw the majority of the people say “secure the border first” before you talk about reforming immigration. My guess is nothing has changed in those priorities with the public.

Secondly, politicians need to tread lightly here if they don’t wish to be seen championing the cause of law breakers and illegal immigrants against the wishes of American citizens. This is one time the “fairness” argument isn’t going to win them anything. Americans do not see it as “fair” that illegals are protected from the consequences of their illegal entry and they’re stuck with the bill supporting their health care and schooling.

So this will all be interesting to watch in the coming few weeks and months. I still don’t think they get anything done legislatively, but – as we’re already seeing – the rhetoric is going to be increasingly heated and nasty – and, this rally against Arizona may end up coming back and biting those who foment it and support it in the posterior.

UPDATE: According to Gallup, among those Americans who have heard of the Arizona law, a majority support it.

~McQ


More goodies found in ObamaCare

Since no one apparently read – or had the time to read – the ObamaCare bill before it was passed into law, parts of it are just now coming to light that, to most, are going to be a surprise. For instance, a mandate having very little to do with health care but certainly a very costly tax mandate for business was slipped into the bill. Maybe this is why those additional 16,000 IRS agents are needed:

Under current law, businesses are required to issue 1099s in a limited set of situations, such as when paying outside consultants. The health care bill includes a vast expansion in this information reporting requirement in an attempt to raise revenue for an increasingly rapacious Congress.

[...]

Basically, businesses will have to issue 1099s whenever they do more than $600 of business with another entity in a year. For the $14 trillion U.S. economy, that’s a hell of a lot of 1099s. When a business buys a $1,000 used car, it will have to gather information on the seller and mail 1099s to the seller and the IRS. When a small shop owner pays her rent, she will have to send a 1099 to the landlord and IRS. Recipients of the vast flood of these forms will have to match them with existing accounting records. There will be huge numbers of errors and mismatches, which will probably generate many costly battles with the IRS.

As one CPA notes:

Under the health legislation, the IRS could be receiving billions of more documents. Under current law, businesses send Forms 1099 for payments of rent, interest, dividends, and non-employee services when such payments are to entities other than corporations. Under the new law, businesses will be required to send a 1099 to other businesses for virtually all purchases. And for the first time, 1099s are to be sent to corporations. This is a huge new imposition on American business, costing the private economy much more than any additional tax that the IRS might collect as a result.

This mandate will generate new compliance costs which will, as the CPA notes, cost businesses “more than any additional tax that the IRS might collect as a result”. As little as $600 in business supplies generates a 1099. It is no longer limited to the categories listed above, but to the size of the purchase. The practical fallout?

The House bill would extend the Form 1099 filing requirement to ALL vendors (including corporate) to which they pay more than $600 annually for services or property. Consider all the payments a small business makes in the course of business, paying for things such as computers, software, office supplies, and fuel to services, including janitorial services, coffee services, and package delivery services.

In order to file all these 1099s, you’ll need to collect the necessary information from all your service providers. In order to comply with the law, you would have to get a Taxpayer Information Number or TIN from the business. If the vendor does not supply you with a TIN, you are obligated to withhold on your payments.

As Chris Edwards at CATO notes:

Private transactions are the core of a market economy, and the source of America’s growth and prosperity. Now the federal government is imposing a vast new web of red tape on perhaps billions of these growth-generating private exchanges.

If it were me I’d be figuring out how to make a whole bunch of $599 purchases, but that’s not the point, of course. This mandate and imposition on business is going to require a huge effort toward compliance and cost a lot of money. It’s just another reason for a business to postpone hiring because the money they were going to put toward a new employee is now shifted to the compliance requirement.

This is how government interferes in the economy in a non-productive way and ties up money that would otherwise be put toward productive economy and job expanding use.

~McQ


Welfare State In Crisis

The bailout of Greece may not work. Spain is teetering on the edge of serious financial doom. The Euro is taking a beating. And the banks of Europe are not looking too healthy overall. Meanwhile, here in the States, unfunded government debt, already expanding at an unprecedented rate, is set to explode. What do all of these things have in common? They are the direct result of expanding the welfare state without any means of actually paying for all of it.

In truth, there is never a way to pay for expanding the welfare state because, while wealth creation isn’t a zero-sum game, the population of wealth-creators is; after all, not just anyone can create electricity, telephones, heart medications, MicroSoft, Wal-Mart, or even pencils without some know-how, sweat and inspiration. If that were possible, then wealth creation could never be retarded, regardless of the impediments. Some wise, noble, and completely selfless individual would always emerge to drive the economy forward. Alas, self-interest trumps all, without which wealth-creation is for the horses.

No matter how ingenious the plan, or divine the motives, the only way for governments to fund the welfare state is to tax the wealth-creators. As even the most Marxist of intellectuals knows, if you want less of something, then tax it. This is why cigarettes are levied against in ridiculous proportions, and why carbon taxes are considered (by some) to be the savior of our planet. Well, taxing wealth-creation works exactly the same way: tax it more, and you will get less of it. Which leads to the inexorable conclusion that, as the governments of the world sink deeper into fiscal crisis, the looters will be coming en masse.

Does that mean that we are in for another Great Depression? Not necessarily. In fact, I predict that no such thing will occur. For starters, we have many institutions in place today that didn’t exist in the 1930′s such as the FDIC, Social Security, Medicare, the IMF, and the World Bank. Some of these things are arguably beneficial in that they smooth out the rough patches that economies inevitably encounter. The U.S. economy, for example, may not have realized the devastation it did if old people, like McQ, could have survived without taxing their families’ resources so much, or the FDIC had been in place to quell bank runs. Maybe. But more importantly, in this day and age our politics and law-making bodies (and those of every democratic society) are dominated by those whose own self-interest is firmly grounded in the ability to buy votes. That ability is highly dependent upon feeding the welfare state, since the vast majority of votes are bought from those who don’t create electricity or heart medications. This is why politicians of all stripes won’t take steps that would decrease the welfare state, because to do so will cost them votes — to the politician who promises more largesse at the expense of whatever hated rival is being villainized at the time. Accordingly, the odds are rather stacked against wealth-creators continuing to employ their skills in service of the very state that punishes them.

Instead of the Great Depression, Part Deux, I would predict that the elites (those, and their friends, who hold the power to dole out goodies for votes) will shuffle the deck just enough to ensure that they stay in favor, while allowing the overall health of the economy to softly fade into oblivion. They are like Dr. Kevorkian administering to capitalism. The ability to create wealth will slowly continue to be arrogated to the governors and “experts,” while the welfare state expands in decrescendo. Eventually, we will be left with something akin to the Ottoman Empire: all power and glory in name only, inside a rotting shell, harkening back to a time so dissimilar as to be unworthy of the title. What’s left will be hopeless, farcical and cruel, and will not have the slightest ability to nurture the welfare state that started it all. Perhaps the “Long Morose” would be a better title.

Irrespective of my gloomy predictions, there simply isn’t any question that, at some point, the beneficiaries of the great welfare state will have to take a bath. Most likely, that day will come when everyone jumps in the tub together. Until that time, prepare for the politically powerful to loot the wealth-creators out of existence in order to pay off the welfare beneficiaries. Eventually the only ones left to take that bath will be the filthy and the unwashed.


Charlie Crist to launch independent Senate Run

Apparently, Charlie Crist has convinced himself that the people of Florida desire his leadership keenly, despite taking a vicious hammering in the polls for the Republican nomination. So, he’ll be announcing an independent run for US Senator.

Stick a fork in him. He’s done. The Republicans will henceforth treat him as if he has a case of virulent Ebola and herpes. I’ve got no clue where he’s going to get financing from.

The best he can do is split the Republican vote, and ensure a Democrat gets elected. If that happens he’ll be like a new Arlen Specter, except for being even more of a loser.


More debt pressure on Europe…and US business

Following yesterday’s announcement that Greek debt was downgraded to junk status, today Spain’s debt was downgraded as well. Spain is, in many ways the bellwether for Europe’s debt crisis. Spain has a much larger economy than Greece. So large, in fact, that it may be too big to bail out.

Fortunately, Spain’s debt is still less than 60% of GDP; however, the country is on a reckless fiscal path and the government shows no signs of doing anything about it.

As a result of the growing crisis, the Euro is getting hammered in the FOREX market, while the dollar is soaring. This is, in effect, an interest rate hike for US businesses that export to the Euro zone.

Naturally, this places downward pressure on US export sales at a time where the overall business climate is still weak. So, none of this is good news for the American economy, either.


Lindsey Graham finally gets the message … and delivers one

And that message: is if your political opponents are in a hole of their own making, don’t throw them a rope.

That’s precisely what Sen. Lindsey Graham (R-SC) was in the middle of doing prior to this past week.  He was the lone Republican Senator working on the “climate” bill with Senators John Kerry (D-VN) and Joe Lieberman (I-CT).  Additionally, he was also the only Republican Senator working on immigration.

This past weekend, Graham pulled out of the cap-and-trade “climate” bill, leaving it in doubt – although word now has it that it was Harry Reid (D-Desperate) who decided it must wait for immigration. That would actually make sense since it is Harry Reid who is in re-election trouble in a state with a large Hispanic population who’ve complained Democrats haven’t done anything with immigration.

Graham seems to have finally awakened to the fact that he has an opportunity to slow both cap-and-trade and immigration down and hobble the administration’s agenda in this Congress. Today he made it clear that immigration was off the table, as far as he was concerned, for this year – if not next:

Sen. Lindsey Graham, the sole Republican working on a bill to legalize illegal immigrants, in effect put the bill on the shelf on Tuesday, saying that a debate now would destroy any prospects for passage and that the issue needs to wait until 2012.

The remarks likely signal the end of any serious chance for broad immigration legislation to pass this year, since Mr. Graham, South Carolina Republican, was the best hope for a partnership with President Obama and Democrats who want to write a bill.

Unlike the cap-and-trade bill, there has been no immigration bill yet written. So, given the process, even given priority, legislation would take months and months before passage. Graham was the forlorn hope of Reid and the Democrats on immigration. He effectively slammed that door in Reid’s face yesterday. And he’s playing some smart politics in how he’s framing his decision. He’s tapping into that latent anger within much of the country about the refusal of the federal government to secure the borders.

“It is impossible for me and any other serious Democrat to get this body to move forward until we prove to the American people we can secure our borders,” Mr. Graham told Homeland Security Secretary Janet Napolitano, who was testifying at a Senate Judiciary Committee hearing.

“I believe we can do it by 2012 if we’re smart,” he said.

Ms. Napolitano, a former governor of Arizona, disagreed with Mr. Graham’s evaluation of border security. She said she knows the southwest border as well as anyone and, by every measure Congress has laid out, the border is more secure: Fewer illegal immigrants are being apprehended, and more fencing and infrastructure have been deployed.

But under close questioning by Mr. Graham, Ms. Napolitano could not say whether she would declare the border secure if she were still the governor of Arizona. She called it an “unfair question.”

“It is a fair question, and I’ll give you my answer: I don’t think it is,” Mr. Graham said. “I think since the last effort to solve immigration the border situation has deteriorated.”

Popular position that plays well to the Tea Partiers and again points to ineffective government. Essentially, in one week, Graham has made the completion of the Democratic/Obama agenda much, much more difficult – if not impossible – during this session of Congress.


Happy Meal toy ban followup

You remember the story yesterday about Santa Clara county’s desire to ban toys in meals the board of supervisors had decided were unhealthy?

They’ve passed the provision:

On Tuesday, the Santa Clara County Board of Supervisors took action by prohibiting fast-food restaurants from using toys to lure kids into buying unhealthy meals. The vote was 3-2.

Have to love the “reporting”.  Obviously a supporter of arbitrary government intervention the LA Times’ Karen Kaplan gives us another example of unbiased reporting:

Not surprisingly, the toy ban has angered folks who resent government efforts to help Americans eat healthier.

And if you’re wondering, the link above brings you right back to the QandO story yesterday on this subject.  I, of course, make no bones about being biased, never have – this is more “nanny state goodness”.  You see, Ms. Kaplan obviously thinks it is the role of government to “help Americans eat healthier” even if it means banning things.  My guess is she’d not be quite as ready for government bans it they had to do with, oh I don’t know, books or something similar.

The excuse?

In Santa Clara County, one out of every four kids is either overweight or obese. Among 2- to 5-year-olds from low-income families, the rate is one in three. The county health system spends millions of dollars a year treating kids for health problems related to obesity, and the tab is growing.

If you haven’t yet figured out that the passage of ObamaCare has emboldened the nannies at all levels, this ought to make the case.  Trust me, this reporter didn’t dig this nugget out.  It was handed to her by those trying to justify this power grab.

Anyway, how will this work?  Well, just as the FDA is going to be fiddling with the salt content in your favorite spaghetti sauce, the board of supervisors – all board certified nutritionists I’m sure – have decided on these criteria for a “trinket” to be included in order to “lure kids into buying” the meal:

In order to combine trinkets with burgers, chicken nuggets or other children’s fare, a meal must meet some basic nutritional requirements. Among them:

– No single food item can contain more than 200 calories, the drink cannot have more than 120 calories, and the entire meal cannot exceed 485 calories.

– No single item can contain more than 480 milligrams of salt, and the entire meal is limited to 600 mg of salt.

– No more than 35% of the calories can come from fat.

– No more than 10% of total calories can come from added sugar.

What has to be understood here is this is one of those precedent setters – if you give the Board of Supervisors this without a fight, how can you deny them the right, next time, to go after something else? Legitimate question. Because you know if they win this, there’s very little to restrain them from managing the rest of your life.

So where does this fight have to be won now that the board of supervisors have voted? Well thankfully it has to be approved again at a second Board of Supervisors meeting in May. If the article cited is to be believed, a poll shows 80% of the county opposes the ban. A bunch of that 80% needs to be in attendance at that BoS meeting next month and tell the emboldened nanny to butt out.

~McQ


Open Borders

Over the past few days, I’ve been watching with interest on Twitter as Doug Mataconis and Jason Pye have been moaning about the new immigration law in Arizona. Now, I grant it’s a bad law from a civil liberties perspective. I’ve seen to much of policing from the inside to trust police not to run a truck through any ambiguities that they find in the law.

But some of the links they’ve posted seem a bit overdone. For instance, one of them linked to an article that implied that there’s a white supremacist behind the movement to pass the law. But what really caught my eye was a link to an article that gave all the standard libertarian reasons for having open immigration.

There was only one thing wrong with the article. It made all sorts of arguments about natural rights and economics, but nowhere did it address national security.

So, I guess my question is this: If you are going to argue for opening the borders, how will you go about doing so in a world of hostile nation-states, whose citizens may wish to do us harm? Clearly, the framers gave some thought to the issue, as they gave Congress plenary power to regulate immigration.

So, even granting that the rights-based and economic arguments are correct, which, mainly, I do, I still would like to know how you would address the security implications of open borders in a hostile world.

Surely, our agreement on the general principles of liberty don’t require us to commit seppuku by allowing hostile foreign powers to take advantage of them, do they?

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