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Free Markets, Free People

Saudi Arabia: Not happy with Obama and seeking partners elsewhere

Obviously I have mixed feelings about the country of Saudi Arabia.  On the one hand they’re a tyrannical 12th century monarchy that controls a good portion of the world’s oil and exports a brand of radical Islamism.  On the other hand they’re a bulwark against Iranian aggression and expansionism and a titular ally of the US.

So, the question then, given the situation in the Middle East, is it in the best interest of the US to do things that have them seeking  solace and partners (allies they feel they can depend on?) elsewhere?

Yeah, probably not.  But that’s exactly what is going on.  Interestingly it is Tom Brokaw who brought the situation to our attention:

After remarking on the difficulty of establishing democracy in the Middle East, Brokaw said that Defense Secretary Robert Gates “will face some tough questions in this region about the American intentions going on now with all this new turmoil, especially in an area where the United States has such big stakes politically and economically.”

“And a lot of those questions presumably will come from King Abdullah of Saudi Arabia,” reported Brokaw on the Nightly News.  “I was told on the way in here that the Saudis are so unhappy with the Obama administration for the way it pushed out President Mubarak of Egypt that it sent high level emissaries to China and Russia to tell those two countries that Saudi Arabia now is prepared to do more business with them.”

Wonderful.

All of this stems from how the Obama administration handled Egypt.  And it has caused Saudi Arabia to doubt the sincerity of the relationship between the US and the kingdom.

However, Saudi Arabia’s concerns emanate from the manner in which Egyptian dictator Hosni Mubarak was removed from power. Mubarak had been an American ally for decades and yet the Obama administration, in the eyes of Saudi criticism, turned its back on the Egyptian government when reformist protests spilled into the streets.

High sounding rhetoric talks, but actions walk, and SA is not at all happy about the actions the administration took in Egypt nor, apparently, satisfied with their assurances since.  And despite the supposed buy-in of the Arab League on the latest attack on an Arab country- Libya- I’d guess they’re not particularly happy with that either.  Another indicator they file away and continues to feed their fear of the sincerity of the US as an ally.

The good news, if there is any, is the administration has apparently figured out that it has badly messed up its relationship with SA.  Whether or not they can salvage the relationship remains to be seen.  It may take another trip by Obama and a lot more bowing and scraping to do that:

Mr. Gates met with the Saudi king on Wednesday, and the Associated Press reported that the purpose of the meeting was to smooth relations with the uneasy and oil-rich ally, noting that "this was Gates’ third trip to the area in the past month."

Thus far the Obama administration has been a foreign policy disaster.  Interestingly, some of the highest polling results for Obama deal with his handling of foreign affairs.  If anything, that should clue you into how badly it is going for him on the domestic front.

[HT: McQ2]

~McQ

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Your global warming, er, climate change update

The Gorebots are not in a happy place today and the latest update on our warming changing climate are posted:

The global temperature has fallen .653°C (from +0.554 in March 2010 to -0.099 in March 2011) in just one year. That’s a magnitude nearly equivalent to the agreed upon global warming signal agreed upon by the IPCC. It is quite a sharp drop.

According to the 2007 Fourth Assessment Report by the Intergovernmental Panel on Climate Change (IPCC), global surface temperature increased by 0.74 ± 0.18 °C (1.33 ± 0.32 °F) during the 20th century

Oh noes.

For those who prefer charts, try this:

uah_march2011

So when they try to limit the EPA’s power to "regulate" Greenhouse gasses today in the Senate via the McConnell/Inhofe amendment, tell your Senator to vote for the amendment.

~McQ

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Musing about government shut down

Obviously the first and most important point to be made about the possibility of the government shutting down this week is the fact that had Democrats, who held a majority in both the House and Senate last year, done their basic job of passing a budget, this wouldn’t be an impending problem.

Now, unsurprisingly, it has devolved into a political battle pitting the Republicans on the side of cutting spending as their constituency insists upon (and voted for) against Democrats who, failing to do their job last year, now are dragging their feet in the Senate (the House passed a continuing resolution to fund government 46 days ago) and making veto threats from the White House.

Funny, how politics works, isn’t it?  Those who didn’t do their job last year or provide any leadership on the subject are now actively working against passage of a stop-gap funding measure and prepared to blame those who are attempting to fix the problem for any government shutdown which might occur.

While he had every opportunity to weigh in on the budget last year when Democrats didn’t pass one, now that he sees political advantage in weighing in (he just started his 2012 re-election campaign remember) we finally hear from President Obama:

“What we can’t be doing is using last year’s budget process to have arguments about abortion; to have arguments about the Environmental Protection Agency; to try to use this budget negotiation as a vehicle for every ideological or political difference between the two parties. That’s what the legislature is for, is to have those arguments, but not stuff it all into one budget bill.”

Now he takes a stand.  When his party failed to pass a budget last year?  Crickets.  Apparently fully prepared to live on continuing resolutions during the tenure of the Democratic controlled Congress, now he’s putting his foot down.  Instead of working to ease the situation and negotiate a settlement that would be acceptable to both parties, he threatens a veto.

“On the issue of a short-term extension, we’ve already done that twice. We did it once for two weeks, then we did another one for three weeks. That is not a way to run a government.

No kidding.  But where in the heck was the president last year when Congress failed in its duty and set this predicament up?  The government has been working on “short-term extensions” since October of last year.  Now, suddenly, they’re a problem.

I don’t disagree with Obama’s points, I just am disgusted by the disingenuousness of the argument.  Not that it surprises me, however, at all.

But when government shuts down, and the blame game begins, remember the reason that such a situation even developed in the first place.  Congressional nonfeasance and lack of presidential leadership.

~McQ

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Ryan budget proposal: you can pay me now or you can really pay me a heck of a lot later (updated)

Problem:  As a nation we’re in dangerous debt territory.  If we don’t do something quickly and dramatically, we’re headed for some very rough and painful times.

But while it seems the American public senses this on the whole, polls seem to indicate that all the “free” stuff handed out by government is popular with a large percentage of the population.  Or said another way, they understand that we have a debt problem, they understand the implications of that problem and they don’t mind spending cuts – just so the spending cuts don’t effect programs they like.

The problem is further compounded by an irresponsible administration which gives the debt problem lip service but submits budgets that exponentially increase the problem:

The president’s recent budget proposal would accelerate America’s descent into a debt crisis. It doubles debt held by the public by the end of his first term and triples it by 2021. It imposes $1.5 trillion in new taxes, with spending that never falls below 23% of the economy. His budget permanently enlarges the size of government. It offers no reforms to save government health and retirement programs, and no leadership.

Both of these facts make it hard for those who would actually like to address the problem of debt before it overwhelms us.  That’s because they’ll really get no support politically from the administration, no call to arms and leadership, and the American people are proving to be fickle about the whole process sending very mixed signals.

Solution?

Well the obvious solution is to find some means of cutting spending to at least the level of revenue and to begin working to pay the debt down in an earnest and timely manner.  What isn’t a solution is business as usual but on steroids as proposed by the President.  So today, Rep. Paul Ryan (R-WI) introduced the GOP plan to address the problem.  Or at least part of the problem.  That of out-of-control spending and addressing the debt.  How it will play with the American people remains to be seen, but it is both an earnest and timely proposal.  It also makes some pretty dramatic cuts which is where you can expect to see the pushback.

For starters, it cuts $6.2 trillion in spending from the president’s budget over the next 10 years, reduces the debt as a percentage of the economy, and puts the nation on a path to actually pay off our national debt. Our proposal brings federal spending to below 20% of gross domestic product (GDP), consistent with the postwar average, and reduces deficits by $4.4 trillion.

But there’s pain in them thar words.  And it means things are going to have to be quite different in some areas than they are now.  Government is going to have to be rolled back.  That is unless we’re partial to a complete collapse of our economy and our currency, hyper inflation and all the good times those developments would bring.

So to specifics in Ryan’s proposal.  Addressing welfare in general, he says:

This budget will build upon the historic welfare reforms of the late 1990s by converting the federal share of Medicaid spending into a block grant that lets states create a range of options and gives Medicaid patients access to better care. It proposes similar reforms to the food-stamp program, ending the flawed incentive structure that rewards states for adding to the rolls. Finally, this budget recognizes that the best welfare program is one that ends with a job—it consolidates dozens of duplicative job-training programs into more accessible, accountable career scholarships that will better serve people looking for work.

As we strengthen and improve welfare programs for those who need them, we eliminate welfare for those who don’t. Our budget targets corporate welfare, starting by ending the conservatorship of Fannie Mae and Freddie Mac that is costing taxpayers hundreds of billions of dollars. It gets rid of the permanent Wall Street bailout authority that Congress created last year. And it rolls back expensive handouts for uncompetitive sources of energy, calling instead for a free and open marketplace for energy development, innovation and exploration.

I am quite pleased to see the second paragraph.  It is indeed time to eliminate “corporate welfare” and subsidies for favored industries.  It also takes on what we would call traditional welfare.  And make no mistake about it Medicaid and food stamps are welfare.    As for the “perverse incentives” Ryan points too, here’s what they’ve yielded recently:

Snap 1

I’m sure some of that comes with the economic downturn, but it also indicates the effect of the incentives to sign people up for the welfare program.

We can’t afford the level of welfare we’re paying out now – and that included corporate welfare and subsidies.  We are a compassionate people, but I end up shaking my head when I hear government officials claiming that people at “4 times the poverty level” need help?  Really?  So what’s the purpose of the poverty level as a measure and why are we now convinced we have to “help” people well above that level?

Then there are the twin third rails of politics, but areas where dramatic reforms are absolutely necessary to get us on the right fiscal track as a country.  And those are Medicare and Social Security.  The Ryan plan:

Health and retirement security: This budget’s reforms will protect health and retirement security. This starts with saving Medicare. The open-ended, blank-check nature of the Medicare subsidy threatens the solvency of this critical program and creates inexcusable levels of waste. This budget takes action where others have ducked. But because government should not force people to reorganize their lives, its reforms will not affect those in or near retirement in any way.

Starting in 2022, new Medicare beneficiaries will be enrolled in the same kind of health-care program that members of Congress enjoy. Future Medicare recipients will be able to choose a plan that works best for them from a list of guaranteed coverage options. This is not a voucher program but rather a premium-support model. A Medicare premium-support payment would be paid, by Medicare, to the plan chosen by the beneficiary, subsidizing its cost.

In addition, Medicare will provide increased assistance for lower- income beneficiaries and those with greater health risks. Reform that empowers individuals—with more help for the poor and the sick—will guarantee that Medicare can fulfill the promise of health security for America’s seniors.

I’ve already seen some on the left characterizing this as "privatizing" Medicare. And, of course, as we all know, that’s dangerous as government always does it better – look at the budgets for example. Look at the debt.

In fact, what Ryan is talking about is giving seniors a choice vs. automatically enrolling them in a government insurance program that averages about $60 billion a year in waste, fraud and abuse.  There will be a subsidy – probably means tested.  Is the the ideal libertarian answer?  No.  But as I’ve said before, freedom is choice and any legislation that expands that is at least a step in the right direction. 

We must also reform Social Security to prevent severe cuts to future benefits. This budget forces policy makers to work together to enact common-sense reforms. The goal of this proposal is to save Social Security for current retirees and strengthen it for future generations by building upon ideas offered by the president’s bipartisan fiscal commission.

Perhaps raise the caps (I gave a certain percentage to my 401k regardless of how much I earned, so doing the same with Social Security doesn’t really bother me.  And it will provide increased revenue for the fund.  Again, ideal?  No, but then I don’t consider either Medicare or Social Security to be “welfare” since most participants have paid into those systems for their entire working life.   But there are changes which will have to be made.  I don’t favor means testing if the cap is raised.  But I do think that a hard look at the retirement age is necessary.  My ideal outcome, obviously, would be getting government out of the retirement income business, but that’s not going to happen.  So Social Security has to be made self-supporting and not a drain on the budget – as does Medicare.

Budget enforcement: This budget recognizes that it is not enough to change how much government spends. We must also change how government spends. It proposes budget-process reforms—including real, enforceable caps on spending—to make sure government spends and taxes only as much as it needs to fulfill its constitutionally prescribed roles.

If we don’t get some restrictions on government spending, nothing is going to change.  Nothing.  We’ve watched Congress talk the talk for decades, ala Nancy PAYGO Pelosi.  But they ignore their own legislation and policy at will.   As Ryan says, there have to be “real, enforceable caps on spending”.  I interpret that as “you cannot and will not spend more than you take in”.  We’ll see how the Congress interprets that.

Tax reform: This budget would focus on growth by reforming the nation’s outdated tax code, consolidating brackets, lowering tax rates, and assuming top individual and corporate rates of 25%. It maintains a revenue-neutral approach by clearing out a burdensome tangle of deductions and loopholes that distort economic activity and leave some corporations paying no income taxes at all.

Here is something that is going to be as hard to do as entitlement reform.  Why?  Because the tax system provides Congress with another way to wield its power.  But the way it has wielded this power has done precisely what Rep. Ryan points too here – it has “distort[ed] economic activity.”  Make the system simple, remove the loopholes, broaden the base (get some more “skin” in the game from those who now don’t pay taxes) and my guess is you’ll not only see an increase in revenue, but a far greater increase in economic activity.

Bottom line:  We are in a “you can pay me now or you can pay me later” moment.  And if we wait, we’re going to be paying a price we’re just not willing to pay, all because we chose to avoid the pain now.   I’m sure the opponents of this proposal are going to call it “extreme” and something that will “hurt the children”.  Trust me, if you want to see extreme, put it off until this house of cards collapses.  And if you want to avoid “hurting the children”, man up and face the pain now to avoid it later when it really will “hurt the children”.

UPDATE: Chris Edwards at CATO gives his take on the Ryan budget.  I’m pretty much agreed with everything Edwards says:

  • Ryan doesn’t provide specific Social Security cuts, instead proposing a budget mechanism to force Congress to take action on the program. It is disappointing that his plan doesn’t include common sense reforms such raising the retirement age.
  • Ryan finds modest Medicare savings in the short term, but the big savings occur beyond 10 years when his “premium support” reform is fully implemented. I would rather see Ryan’s Medicare reforms kick in sooner, which after all are designed to improve quality and efficiency in the health care system.
  • Ryan adopts Obama’s proposed defense (security) savings, but larger cuts are called for. After all, defense spending has doubled over the last decade, even excluding the costs of wars in Iraq and Afghanistan.
  • Ryan includes modest cuts to nonsecurity discretionary spending. Larger cuts are needed, including termination of entire agencies. See DownsizingGovernment.org.
  • Ryan makes substantial cuts to other entitlements, such as farm subsidies. Bravo!
  • Ryan would turn Medicaid and food stamps into block grants. That is an excellent direction for reform, and it would allow Congress to steadily reduce spending and ultimately devolve these programs to the states.
  • Ryan would repeal the costly 2010 health care law. Bravo!

Here’s a chart Edwards includes in his post:

201104_blog_edwards52

 

I’m a huge supporter of military spending in order to maintain our national security and technological edge, but I find it hard to believe that there aren’t many places where savings could be accrued in “Security”.  And I’d also note under the broad “Security” umbrella fall many other programs that could be cut – like the entire TSA.  But, in any event, it is an area that should also be looked at with an eye for cutting spending.  It would get us to our goal of paying down the debt even sooner and it can be done without jeopardizing our security (cut costs not capability).

UPDATE II:  Geoff over at Ace of Spades gives a little context to the Ryan proposal:

PublicDebtRyanvsCommissionSmall

 

Now, where I come from, the “extremes” are on either side of a situation, right?

~McQ

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Gitmo, military tribunals and Obama

Guantanamo was going to be closed and Obama planned on bringing the accused terrorists to trial in Federal Court.  One of the things he said was he believed they were entitled to a day in court and that the Bush administration had held the detainees way too long.  “Speedy trial”, etc.

Now, two years after assuming office, the Obama administration and Attorney General Holder have completely reversed themselves and decided that not only is Gitmo the proper venue for such trials, but that military tribunals, a means which they both savaged, was also adequate for the job.

Predictably the left is out to spin it in such a way that it is everyone else’s fault but Obama and Holder.

John Cole in a post entitled “Cowards”:

And no, I’m not talking about Obama and Holder. I’m talking about the clowns in Congress who apparently don’t have enough faith in this nation and who are so afraid of one man that they have to try him in secret in another country.

Simply said and as usual, mostly wrong.

Jeralyn Merritt also wants to blame Congress but is more specific about it:

I was really hoping Obama and Holder could think outside the box and come up with a way to defeat the Republican-created ban on federal criminal trials. It’s not the trials that were banned, just funding for getting them to the U.S. to stand trial.to lay the blame on Congress –

Republican created?  Merritt clarifies that a bit, but again, for the umpteenth time I want to point out that from 2008 to 2010 Democrats enjoyed huge majorities in Congress and could have done just about anything they wanted to do with the funding of federal trials or moving the venue of the trials to a city in the US.

It didn’t happen not because of Republicans, but because of one of the few bi-partisan moments in those two years.  For the most part no one wanted those trials in the US.  For example:

Senator Charles E. Schumer, a New York Democrat who objected to holding the trial anywhere in New York State, hailed the administration’s decision Monday.

“This means with certainty that the trial will not be in New York,” he said. “While not unexpected, this is the final nail in the coffin of that wrong-headed idea. I have always said that the perpetrators of this horrible crime should get the ultimate penalty, and I believe this proposal by the administration can make that happen.”

It was a “wrong headed idea” from the beginning.  There were two reasons.  One, most didn’t see the detainees as “criminals” and thus they were not deserving of a “criminal trial”.  They are accused terrorists who had committed acts of war against the US, so military detention and military tribunals seemed much more appropriate.  Two, moving them to the US put whichever city hosted the trials in the crosshairs of terrorists.  It would be an unnecessary risk for what were basically to be show trials.  However, the other risk was, given the sensitive nature of some of the intelligence used to apprehend them and prove their guilt, revealing it in civilian court would compromise the methods used.  So there was (and is) a distinct possibility that they’d get off in a civilian trial even though enough evidence of a secret nature existed to convict them handily. 

The perfect venue then was the tribunal system where such information could be introduced in a venue that would protect that information.

And let’s be clear about a couple other things.

There was no desire to see justice done by either Holder or Obama – it was mostly about trying to back up campaign rhetoric, which this decision finally points out was wrong, with action. 

The White House Press Secretary, Robert Gibbs, for instance:

"Khalid Sheikh Mohammed is going to meet justice and he’s going to meet his maker," said President Barack Obama’s press secretary, Robert Gibbs. "He will be brought to justice and he’s likely to be executed for the heinous crimes that he committed in killing and masterminding the killing of 3,000 Americans. That you can be sure of."

Really?  If the idea is to show the “American criminal justice system works”, it’s hard to see that with words that are really just screaming “show trial” from the spokesperson for the President of the United States.  Gibbs took a lot of heat for that, as he should have, but it was a moment of truth that said they weren’t really interested in justice so much as having their way.  And it was the President himself who also made such a “prejudgment”:

In an interview with NBC News, Obama said those offended by the legal privileges given to Mohammed by virtue of getting a civilian trial rather than a military tribunal won’t find it "offensive at all when he’s convicted and when the death penalty is applied to him."

Also remember that the Obama Administration and the Justice Department endorsed indefinite detention regardless of the outcome of trials.  So had any of the detainees managed to get a verdict of “not guilty”, they might have been detained anyway.  Again, that screams “show trials” – if the verdict comes out the way we want it we’ll execute it.  If not, and we deem it necessary, we’ll keep the detainee for as long as we wish.

So while it may feel good to those on the left to blame Congress for this decision, I actually have to agree with Democrat Chuck Schumer – which pains me a bit – this was a “wrong headed idea” from the get-go and it has finally collapsed under the weight of reality.

We’re at war with these people, not fighting “crime”.  They are “enemy combatants” until proven otherwise.  They should be treated as we’d treat any such prisoners – and have treated them in previous wars – through trial by military tribunal.

And finally, after a two year delay (so much for the “speedy trial” complaint by Obama) we’re back where we were in 2008.

Oh speaking of 2008, by the way:

The defendants indicated in December 2008 that they were inclined to plead guilty without a full trial. But in one of his first steps after taking office, Mr. Obama halted all the commissions under way at Guantánamo while he reviewed the detainee policies he had inherited.

He just endorsed what he “inherited” and also managed to delay justice for two more years.

Well done.

~McQ

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War of choice getting in the way of Obama’s preferred message?

Interesting story from Glenn Thrush at POLITICO. And, of course, it is about pure politics.   It seems that Obama’s decision to go to war with Libya has caused a distraction from the most pressing domestic issue – the economy.  And just when some half-way decent news on unemployment is evident.

But in the view of his closest allies, Libya is drowning out his attempts to portray himself as an economic commander-in-chief fighting a series of new threats to the fragile U.S. recovery, especially the devastating and politically poisonous rise in gas prices.

The most recent example: On Friday, press secretary Jay Carney hoped to spend quality time with the White House press corps discussing an upbeat March employment report showing the economy added 216,000 jobs, outpacing analysts’ estimates.

But he was asked a grand total of two questions about the report. He fielded 16 about Libya and at one point had to sneak in a plug for the positive job numbers when a reporter asked a question about budget negotiations with Congress.

“Don’t tell me Libya is not a distraction,” said Leslie Gelb, president emeritus of the Council on Foreign Relations. “Dealing with a military operation of this complexity, with this many moving parts, takes an enormous amount of the president’s time. We’re talking about hours and hours a day dealing with his national security staff. … It has an impact on everything else.”

Now obviously, it we have to go to war for a good reason – an actual imminent danger or threat to our national security – then you don’t worry about how it will effect the political agenda.  You do your duty as CiC.  In fact, a President can normally expect it to help him politically – to get a pretty good bump in the polls – as the nation comes together behind them.

But when the war is perceived as a “war of choice” or a “dumb war”, such a bump may not be forthcoming – as in the case of the war against Libya:

A new Rasmussen Reports national telephone survey of Likely Voters shows 37% give the president good or excellent ratings on his handling of national security issues. Slightly more voters (40%) say the president is doing a poor job when it comes to national security.

Rasmussen isn’t the only polling service to have those numbers:

Just 39 percent of Americans think Obama has clear goals in Libya, while 50 percent think he doesn’t, according to poll results released Monday by the nonpartisan Pew Research Center.

Just 47 percent of Americans support the U.S. airstrikes, while 36 percent don’t and 17 percent don’t know, according to the Pew poll.

The Gallup Poll found similar results, the lowest level of initial support for a U.S. military action in at least three decades, and the first time in 10 interventions dating to the 1983 invasion of Grenada that a majority of Americans didn’t support the action at the onset.

Translation?   This is a political problem of Obama’s own making.  And on the eve of launching his re-election campaign to boot.  Not smart politics – not smart at all.  He’s literally “created” a story by his decision to wage a war of choice that will dominate the news and any other message he tries to spin.  What is clear is that despite the announced hand-over or pullback in US participation, the press continues to treat it like it should be treated – a war instigated and started by the US (and others) and continuing to have US participation whatever the level.

And we’re starting to hear about how overtaxed our coalition partners are now.  The UK for example,.  Says the head of the RAF:

With the RAF playing an important role in Libya, where bombers, fighter jets and surveillance aircraft have all been involved over the past fortnight, he admitted the service was now stretched to the limit.

[Air Chief Marshal Sir Stephen] Dalton, 57, said the RAF was planning to continue operations over Libya for at least six months. His assumption is that planes will be needed "for a number of months rather than a number of days or weeks".

Did you catch that last sentence?  Months instead of weeks.  So we can expect to see this remain in the news for some time and we can most likely expect to see more and more of the coalition members whining about their level of participation and attempting to get a higher level of US participation.  Already, this weekend, the US flew more sorties in the NFZ than previously planned.

So here you have a classic example of not only a dumb war, but dumb politics.  That’s usually what happens when you make snap-decisions without any planning while apparently completely underestimating the reaction of the American people.

Not that anyone on the left will admit that or anything.

~McQ

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Corporate taxes: We’re number 1

As of April 1st, when Japan officially lowered its corporate tax rate, we took over the top spot in the world, as James Pethokoukis points out:

With Japan officially cutting its corporate tax rate as of today, America now has the highest rate among advanced economies. Even its effective tax rate is way above average despite the likes of General Electric spending billions to game the labyrinthine code. A smarter approach would be to substitute a business consumption tax.

Now the United States might cling to second place if Japan cancels the rate reduction to help pay for the tsunami and earthquake devastation. After factoring in state taxes, America’s top rate of 40 percent would still exceed the average of 26 percent for the rest of the OECD.

No, it’s not an April fool’s joke.  We do become the nation which taxes corporate entities the most in the world.   As Pethokoukis also points out, tax rates are like sticker prices on cars – the real tax is significantly lower than that.  But in our case, even with the $40 billion in compliance costs, etc. spent by corporations to lower their tax bill, we still remain the highest corporate tax rate in the world:

Headline rates, of course, are like sticker prices on new cars. The real numbers are lower, thanks in part to the $40 billion companies spend annually to comply with, and often sidestep, the maximum levy. GE, for example, has taken heat for consistently paying less than what the U.S. tax code would imply it should.

But even taking into account the efforts of attorneys and lobbyists, the average effective U.S. rate in 2010 was 29 percent against 21 percent for international counterparts, according to the  American Enterprise Institute. And before the recession, corporate tax revenue as a share of U.S. GDP was at its highest since the 1970s.

“Competitive” is a word politicians like to throw around.  But their tax rate is non-competitive.  It is a factor that weighs heavily on where a business may choose to locate.  Or relocate.  So while we maintain the highest corporate rate in the world, we see politicians mouthing off about punishing corporations that “outsource” jobs.  It is a reaction to a problem government has created and now government talks about punishing those who react rationally to their tax rate?  Amazing.

Secondly, as we’ve said ad nauseum – corporations don’t pay taxes, their customers do.  The corporation, for the most part, simply acts as a means to pass those taxes (incorporated in the price of the good or service produced by the corporation) on to the Federal government.  Any tax rate increase in the corporate world is a tax increase on the customers of that corporation. 

What effect would lowering corporate taxes have?  Pethokoukis lays out the litany:

Politicians of all stripes have been talking about lowering corporate taxes and eliminating loopholes to pay for a sharp rate reduction.  A sharply lower rate —  Canada’s will be just 15 percent in January 2012 — would boost worker wages, investment, productivity, jobs and growth. Such reforms, though a big improvement, would still leave in place a flawed and unwieldy structure.

Like the rest of our tax structure, the corporate tax system is in bad need of reform.  And yes, it’s just another problem among a galaxy of problems that most likely won’t be adequately addressed.  That’s not to say some aren’t trying.  Pethokoukis points out an alternative that will, apparently, be introduced by Rep. Paul Ryan in the GOP’s budget plan for next year:

A better alternative might be a consumption tax where business would simply determine its liability by subtracting total purchases from total sales. The tax would then be imposed on what’s left, essentially a firm’s value added. Unlike the corporate income tax, a consumption tax would allow the cost of investments to be fully deducted immediately, providing incentives for more. Such a tax also could be imposed on imports and deducted from exports, as other nations currently do with their VATs.

The Tax Policy Center estimates an 8.5 percent consumption tax — by broadening the tax base and boosting output – would boost corporate tax collections as a percentage of GDP to 4.5 percent from the 2.4 percent the White House forecasts for the next few years. (This is the corporate tax plan, by the way, found in Rep. Paul Ryan’s “Roadmap for America’s Future.”)

If we have to have a tax, this seems eminently more workable and less onerous while not killing competitiveness or having corporations seeking other places to locate.  And the obvious bonus is  it boosts revenue for the Fed – used hopefully to pay down debt, not enact some pie-in-the-sky new entitlement we can’t afford.

~McQ

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Observations: The QandO Podcast for 03 Apr 11

In this podcast, Bruce, Michael, and Dale discuss the Koran-burning pastor in Florida, the public union struggle in Wisconsin, and the Federal budget.

The direct link to the podcast can be found here.

Observations

As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2010, they can be accessed through the RSS Archive Feed.

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Terry Jones, Koran burning and Constitutional rights (Update)

I don’t know what to say about this goof except in this country, he has every right to do what he’s doing.

I may not like it (I don’t like the “piss Christ” or Westboro Baptist Church either), I may not support it, I may see it as unnecessary and inflammatory to some, but then the same can be said of my other two examples as well.  His activities provide no more of a provocation than do the examples.

One of the tough things about rights and freedoms is they also apply to actions we don’t like (as long as they don’t violate any caveats to those rights). 

Many here would like to liken this yahoo’s conduct to shouting fire in a crowded theater.  I don’t buy it.  Shouting fire in a crowded theater can cause panic and irrational behavior by people in the theater because of lack of information and fear for one’s life. It is an immediate response to an immediate action.  Panic ensues, people rush to limited exits all at one time and some get crushed or trampled. It can cause immediate death and injury.

There’s no such parallel in this this story as far as I can see.  Trust me, I’m not at all pleased by the deaths of UN workers in Afghanistan, but it was at the hands of a mob that was whipped up there (not by the act in FL at the time it occurred) and chose – important word – to react murderously.   That’s right, they chose to attack people who had absolutely nothing to do with the event in Florida well after the deed was done.

Others want to invoke “fighting words” as a reason to shut Terry Jones down.  Uh, no.  The only “fighting words” I can imagine came from whomever it was in Afghanistan that whipped that crowd into its murderous frenzy.  My guess is most in the crowd had never before heard of Terry Jones or his deed until that day.  And my guess is the incitement took place in a mosque.

Don’t mistake this for a defense of Terry Jones.  I think he’s a waste of protoplasm.  And I think what he is doing adds nothing positive to the world around us.  But –and again, this is the hard part – he has every right to do it.

I’ll continue to denounce him and would be glad to tell him to his face that his actions are harmful to both people and the cause he supposedly represents – Christianity.

I doubt he’d listen.  Zealots never do.  But as long as he confines himself to the activities he has so far, it’s his right as an American to continue to do them despite how others in the world choose to react to them.

UPDATE: Figures (debt, deficit, out of control spending, over regulation, ObamaCare – all taken care of I suppose):

Senate Majority Leader Harry Reid (D-Nev.) told CBS’s Bob Schieffer on Sunday that some members of Congress were considering some kind of action in response to the Florida Quran burning that  sparked a murderous riot at a United Nations complex in Afghanistan and other mayhem.

"Ten to 20 people have been killed," Reid said on "Face the Nation," but refused to say flat-out that the Senate would pass a resolution condemning pastor Terry Jones.

"We’ll take a look at this of course…as to whether we need hearings or not, I don’t know," he added.

Here, Harry, let me help you out:

Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.

The first five words (the fourth one in particular) are all Congress needs to know about this.

~McQ

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10 Rebels killed in coalition air strike

So far the “No-Fly Zone” is going swimmingly.  Yesterday we had a report of 40 civilians killed in coalition air strikes in Tripoli (remember, the coalition’s mission is to protect civilians) and today we learn that the coalition managed to kill 10 rebels in a strike yesterday (they’re supposedly helping the rebels, remember?).

Fog of war?  Eh, yes and no.  Mostly just a piss poor war.  As I’ve mentioned before, any competent army will learn to adapt and overcome when possible and that’s apparently what pro-Gadhafi forces are doing.

First they went to vehicles similar to the rebels making it very hard to sort out who is who on the ground.   Then they took it a step further, according to Reuters:

A Western coalition air strike hit a group of rebels on the eastern outskirts of Brega late on Friday, killing at least 10 of them, rebel fighters at the scene said on Saturday.

A Reuters correspondent saw the burned out husks of at least four vehicles including an ambulance by the side of the road near the eastern entrance to the oil town.

Men prayed at freshly dug graves covered by the rebel red, black and green flag nearby.

"Some of Gaddafi’s forces sneaked in among the rebels and fired anti-aircraft guns in the air," said rebel fighter Mustafa Ali Omar. "After that the NATO forces came and bombed them."

Rebel fighters at the scene said as many as 14 people may have died in the bombing, which they said happened around 10 p.m. local time (2000 GMT)

Wonderful.

Meanwhile it appears the possible, or should I say anticipated end state may be – stalemate?  Really?   That’s what all this effort is about?

U.S. officials are becoming increasingly resigned to the possibility of a protracted stalemate in Libya, with rebels retaining control of the eastern half of the divided country but lacking the muscle to drive Moammar Gaddafi from power.

Such a deadlock — perhaps backed by a formal cease-fire agreement — could help ensure the safety of Libyan civilians caught in the crossfire between the warring sides. But it could also dramatically expand the financial and military commitments by the United States and allied countries that have intervened in the six-week-old conflict, according to U.S. officials familiar with planning for the Libyan operation.

Ya think?  That’s always a sign of a well thought out, well planned strategy, isn’t it?

What you’re talking about then is a semi-permanent NFZ, because immediately upon its withdrawal, Benghazi would be under siege again.

What a great solution, no?  Split the country, prop up and support some government in the east (an area that produced 20% of the suicide bombers for Iraq and  has admitted jihadis in the governing councils and rebel fighters) and then fly cover for the next, oh, 10 years or so?

Brilliant.

~McQ

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