The Growth In Income Inequality Wasn't A Bug, It Was A Feature Invented By Liberalism

If you generally tax some income at one rate and other income at a lower one, what do you think would happen over a long period of time?

Obviously you would see income shift to the category taxed at the lower rate, to the extent that this is possible for those earning it.

This is what has happened with income from capital gains, the tax rate on which has been much lower by law than the tax rates paid on ordinary income.

That's the long-term lesson from the data, the salience of which seems to elude Bruce Bartlett writing for The New York Times:

For most people, income is simple: it means wages or perhaps a pension or Social Security benefits. Income from capital – dividends, interest, rent and capital gains – seldom enters into the calculation. The vast bulk of such income is earned by the ultrawealthy, like Mr. Romney.

According to the Tax Policy Center, in 2011 those in the middle of income distribution got about 70 percent of their income from labor and only about 3 percent from capital. By contrast, those in the top 1 percent of income distribution got 30 percent of their income from labor and 35 percent from capital.

The disparity is even more pronounced when one looks at the distribution of aggregate capital income. The total came to $1.1 trillion last year. Of this, 86 percent was earned by those in the top 20 percent of households, ranked by income. But this figure is misleading, because within the top quintile, the vast bulk of capital income went only to those at the very top. ...

[T]he tax code makes a sharp distinction between income from labor and income from capital. Wages are fully taxed at rates as high as 35 percent by the income tax, plus taxes for Social Security and Medicare. In contrast, realized capital gains and dividends on corporate stock are taxed at a maximum rate of 15 percent and do not bear any taxes for Social Security or Medicare.

Income inequality in America has grown precisely for this reason, and it is an artifact of progressivism, and of liberalism generally.

The contemporary distinction between capital gains and ordinary gains got much of its impetus under FDR, when the modern tax code differentiated for the first time between capital gains held for 1, 2, 5 and 10 years, exempting from taxation 20 percent of gains, 40 percent, 60 percent and 70 percent, for the respective holding periods. Considering how steep and confiscatory marginal tax rates became after 1916, the provisions under FDR look like a bone thrown to the rich. What these reforms did, however, was cement the trend toward tax avoidance for the rich which had been introduced earlier.

Originally capital gains had been taxed as ordinary income up to a rate of 7 percent, which was the top marginal income tax rate for the first three years of the modern income tax. But as marginal tax rates on ordinary income skyrocketed after 1916, the low 7 percent capital gains rate continued to apply until 1921, after which the rate was 12.5 percent, regardless of holding period and despite the fact that marginal income tax rates soared to 63 percent and higher as the years marched on.

So from the very beginning the rich were given their privileges in tax avoidance by making distinctions between income while the broad mass of the people got soaked with income taxes on their ordinary income. The steeply progressive rates made it appear that the rich were paying their fair share when in effect they had recourse to a back door to ameliorate their condition through the capital gains code provisions. Liberalism was nothing if not hypocritical. 

If our tax policy goal today is to reduce income inequality, as seems to be the prevailing notion among liberal and liberal-leaning commentators, we ought to reconsider that history and appreciate better how tax policy is often just pushing on a string. To a conservative what leaps to mind is making taxes on ordinary income look more like taxes on capital gains income by flattening rates, not the other way around, raising capital gains rates to look more like progressive income tax rates, and broadening the base up the scale by capturing all income of all kinds for Social Security and Medicare before considering broadening the base down the scale by abolishing tax loss expenditures like the mortgage interest deduction. 

Income inequality begins with treating some forms of income differently than others for tax purposes. There may be important social and economic reasons for doing so, such as promoting family formation or capital investment, but it should never be forgotten that you will immediately be introducing inequality into the equation when you do. How you compensate for that is what matters in approximating a just society. 

Paladins of Economics Eschew the Mob and Excuse the Fed

So says Brian Domitrovic for Forbes, who thinks the Fed's bad habits are congenital.

Domitrovic calls attention to the glaring omission of monetary reform in Mitt Romney's economic proposals, about which his hundreds of recent endorsers from the economics profession have likewise said not a word:

This is a worrisome tendency in economics, on two counts. The first is that the vox populi is probably onto something. Why should the profession risk being wrong on such an important issue?

There is perhaps no institution in our government that has been so cornered by economists as the Fed. The Fed is the place most dominated by the credentialed Ph.D.’s of the profession. It would rankle economists to concede that despite this capture of the Fed by their ranks, the Fed was at fault for causing the worst economic crisis in eons. It would implicate the profession in the whole mess.

Gee, just maybe it's because the capture has gone precisely in the other direction: economics professionals profit from the status quo which puts them in the center of the system which puts them and their friends first in line for the funny money. Why do you think people so desperately worship the presidency in this society, and so desperately want to possess it?

Read the whole thing here.

Byron York Doesn't Get It: EVERY Toss Up State Matters If Romney Loses Florida

Mitt Romney can take a loss in a New Hampshire or an Iowa, give or take, but if he loses in Florida he cannot. Romney absolutely must win in every single other toss up state if he loses Florida, from Iowa to New Hampshire to Nevada to Ohio to Wisconsin to Virginia to Colorado to North Carolina, in order to win.

Iowa doesn't have a special meaning, especially now if it's really true that Michigan moves into the toss-up column as Real Clear Politics says today. Rick Santorum did especially well here in Michigan with pro-life Democrats, who also helped pick Todd Akin in Missouri, and Romney's throat cut to Todd Akin today isn't going to play well with Santorum's supporters, an incident which post-dates the poll taking Michigan out of the leaning-Obama category. The broader point is that 56 percent of Republican primary voters in Michigan picked someone other than Romney: either Santorum, Gingrich or Ron Paul. Romney might have capitalized on the new poll had he not flubbed on Todd Akin. It just shows Romney is still not a skilled politician.

Mitt Romney has emphasized protecting Medicare in Florida as a matter of first importance because he knows Florida is the key to his victory in November. If he can convince seniors there, he can convince them anywhere. Florida makes it easier to win in this bad environment, but without it, it's going to be very much more difficult.

Misguided story here.

Mitt Romney Just Lost My Vote

If anyone should quit the 2012 race it's Gov. Mitt Romney, not Rep. Todd Akin. Even with the clothespin on my nose I won't be able to do it.

Romney should quit not just for the good of the Republican Party, but for the good of the nation. Surely the Republican convention can come up with someone better than this man Romney, whose political convictions are as uncertain as Barack Obama's biography.

Otherwise Romney is certainly going to lead the Republican Party to defeat in November, just like John McCain did in 2008, and a bunch of us who haven't gone broke already will promptly do so while the likes of David Frum tell us it's no debacle. Only in the Republican Party can conservatism be transformed from opposition to the welfare state in 1965 into support for Medicare as a matter of principle in 2012. And you feared Barack Obama would transform America.

The only thing Romney is proving in the case of Rep. Akin is that Republicans once again don't know how to fight, and don't understand how politics works.

Winning parties like the Democrat Party rally around their own when they are in trouble, and at the minimum do not make things worse for themselves by joining in on the criticism of individuals who make mistakes. A good recent example is Rep. Charlie Rangel who has been censured by the US House but is still standing, and quite happily so. Republicans, by contrast, have a habit of rushing at the first sign of trouble to distance themselves from members who come under fire, and end up isolated and alone, resorting to their own devices to survive.

No one but a fool wants such for friends. The voters can smell that smell for what it is: lack of self-confidence. And then they vote accordingly.

My hunch is Missouri will have a new senator named Todd Akin come November, and America will have another four years of Barack Obama.

We deserve it.

Not Only Is Rep. Paul Ryan A Hypocritical Catholic, So Is Radio Talker Sean Hannity

Just now he said he's fairly libertarian on the issue of contraceptives and doesn't object to their use by Americans.

That's not the position of the Roman Catholic Church, to which he belongs and readily and publicly subscribes.

What we're witnessing in America isn't just the shallowness of the beliefs of rank and file Catholics, but also of their most public representatives.

Obama must be thrilled.

Water Is Nineteen Times Rarer Than Gold

"Bodies are much more rare and porous than is commonly believed: water is nineteen times lighter, and by consequence nineteen times rarer than gold . . .."

-- Sir Isaac Newton

Even On The Most Generous Interpretation Of The Data, Rep. Akin Of Missouri Is Right

There are about 6 million pregnancies in the US every year.

The wildest estimates of pregnancy resulting from rape range from as few as 200 to as many as 83,000, the latter representing many self-reported cases.

As a percentage of all pregnancies, 83,000 pregnancies represents almost 1.4 percent of the total.

Calling that rare evidently is impermissible among liberals, and frightened conservatives like Rush Limbaugh. But if 1.4 percent isn't rare, I don't know what is.

The sorriest spectacle today is how conservative talk radio is throwing Todd Akin under the bus.

Romney/Ryan Response To Akin On Abortion Contradicts Roman Catholic Teaching

Will Rep. Paul Ryan, a Roman Catholic, get a pass from the Roman Catholic Church for opposing its teaching on abortion?

In response to the inelegant remarks of Republican Senate hopeful Rep. Todd Akin from Missouri, the Romney/Ryan campaign says it does not oppose abortion in the case of rape, which is not the position of the Roman Catholic Church.

The New York Times reports, here:

The Republican presidential ticket of Mitt Romney and Paul Ryan was quick to distance itself from Mr. Akin’s remarks.

“Governor Romney and Congressman Ryan disagree with Mr. Akin’s statement,” the campaign said. “A Romney-Ryan administration would not oppose abortion in instances of rape.”

Rep. Ryan's position permitting abortion in instances of rape constitutes formal cooperation in a crime and self-excommunication according to the Roman Catholic catechism, here:

Formal cooperation in an abortion constitutes a grave offense. The Church attaches the canonical penalty of excommunication to this crime against human life. "A person who procures a completed abortion incurs excommunication latae sententiae,"77 "by the very commission of the offense,"78 and subject to the conditions provided by Canon Law.79 The Church does not thereby intend to restrict the scope of mercy. Rather, she makes clear the gravity of the crime committed, the irreparable harm done to the innocent who is put to death, as well as to the parents and the whole of society.

Rep. Akin's position against abortion in all circumstances is identical to Catholicism's whereas Rep. Ryan's position explicitly contradicts his own religion.

That's the Republican Party: where conservatives like Rep. Akin are not welcome, but open hypocrites, and fudgepackers from the Log Cabin crowd, most certainly are.

"Valuations Remain Unusually Rich"

So says John Hussman, here:

Valuations remain unusually rich on our measures . . . it should be of some concern (though it is clearly not) that the price/revenue multiple of the S&P 500 is now above any level seen prior to the late-1990’s market bubble. Prior to that time, the highest post-war peaks were in 1965 (which was not followed by a deep or immediate decline, but marked the onset of what would ultimately become a 17-year secular bear market), and 1972, just before the S&P 500 lost nearly half of its value.

The Shiller p/e bears him out (esp. the post-war peak on January 1, 1966 at 24.06 vs. nearly 23 today, and the post-war nadir of 6.64 in July/August 1982, a 72 percent decline in valuation over the course of the secular bear and the mother of all buying opportunities since the war):

The price for performance remains steep.

With "You Didn't Build That" Obama Revealed We're No Free Market Economy

Barack The Builder-Thief

Consider Sheldon Richman, here, emphasis added:

"What we have—and have had for a long time—is corporatism, an interventionist system shot through with government-granted privileges mostly for the well-connected–who tend to be rich businesspeople. This system is maintained in a variety of ways: through taxes, subsidies, cartelizing regulations, intellectual “property” protections, trade restrictions, government-bank collusion, the military-industrial complex, land close-offs, zoning, building codes, restrictions on workers, and more. As a result, people can get rich at the expense of the government’s victims. Even some who have prospered apparently by market means have actually done so through government intervention, such as transportation subsidies and eminent domain. Wealth can be transferred in many ways besides welfare and Medicaid, some of them quite subtle. Most transfers are upward."

Obama's flub in "you didn't build that" wasn't some supposed expression of disdain for free-market capitalism, but rather a too-open affirmation of the collusion which exists in America between government and business, a collusion redolent of the fascism of an earlier era.

The line was supposed to be, before it blew up in his face, a gentle reminder to his peeps that they owe their continued success to his stewardship of this system of corporatist largesse. 

In stating the obvious Obama has let the cat out of the bag and proven himself an unreliable leader for the game of charades we call the free market economy. He let his guard down and opened a window on this uncomfortable truth about America, that in economics we consider our advocates of free market capitalism analogous to the preachers of fundamentalist Christianity. It's a free country and that's all well and good, as long as you're not really serious.

Obama's mistake is that he said all that out loud. He can be replaced.

(image source)

Government Payments Like Social Security/Medicare Consume 89 Percent Of Tax Revenues

The government collects only $2.66 trillion in taxes but spends $2.36 trillion just on Social Security, Medicare, Medicaid, food stamps and the like, summed up as Personal Current Transfer Payments.

If we ran a balanced budget, that would leave just $300 billion for everything else, such as defending the country from our enemies, for which we actually spend about $700 billion currently.

Total current expenditures are running at $3.8 trillion, nearly 41 percent more than we presently take in.

On 1/1/2011 Social Security/Medicare Payments Exceeded Revenues By $329 Billion

Social insurance revenues were $906 billion on 1/1/11, but outlays for Social Security were $703 billion and for Medicare $532 billion on that date, meaning the programs were not self-sustaining, running a deficit of $329 billion.

Romney Has Ryan Reassuring On Medicare Because He Really Needs Florida To Win

The projection (here) back in the second week of April was that 124 electoral college votes were up for grabs in 9 states, with Obama at 233 and the Republicans at 181, who needed at the time 70 percent of the remaining electoral college votes to win.

Today the picture (here) shows the toss-ups reduced to 110 (still in 9 states, though a different mix), Obama up slightly to 237, and Romney up from 181 to 191, who now needs to win almost 72 percent of the remaining toss-up electoral college votes to win, according to the analysis.

In 2008 John McCain lost to Barack Obama because McCain lost in George Bush's red states of Colorado, Florida, Indiana, Iowa, Nevada, New Mexico, North Carolina, Ohio and Virginia (112 electoral college votes) by 1.4 million votes.

A Southern/Western strategy concentrating on Florida, North Carolina, Virginia, Colorado and Nevada would still leave Romney 7 electoral college votes short of 270 if he wins the currently projected 191 in addition.

Romney losing Florida would necessitate winning the 191 plus every one of the states in the toss-up category today, including New Hampshire, hence the recent Medicare emphasis in Florida where many seniors live.

An Eastern Time Zone strategy winning Florida, North Carolina, Virginia, New Hampshire and Ohio in addition to the 191 would give Romney exactly 270.

Rep. Paul Ryan Rejects Conservatism For The Government Dependency Culture

Quoted here:

"When I think of Medicare, it's not just a program, it's not just a bunch of numbers, it's what my mom relies on, it's what my grandma had."

"Medicare was there for our family, for my grandma when we needed it then. And Medicare is there for my mom, when she needs it now. And we have to keep that guarantee."

"But in order to make sure that we can guarantee that promise for my mom's generation, for those baby boomers who are retiring every day, we must reform it for my generation."

Rep. Paul Ryan And His Mother: This Is Not Conservatism

This is Republicanism defending the welfare state. This is not conservatism.

Peter Schiff Warns About Rising Interest Rates But Avoids The Sorry Truth

Peter Schiff, here:

The current national debt is about $16 trillion (this is just the funded portion...the unfunded liabilities of the Treasury are much, much larger). The only reason the United States is able to service this staggering level of debt is that the currently low interest rate on government debt (now below 2 per cent) keeps debt service payments to a relatively manageable $300 billion per year.

First of all, interest payments on the debt haven't been close to $300 billion a year since 1994. They've been above that level ever since 1994, and frequently way above that level.

In fact, interest payments on the debt have been above $400 billion each year from 2006 inclusive, except for 2009. This is important in the context of a Republican House which congratulates itself endlessly for a one-time spending cut of $38 billion.

Secondly, if we were really paying an effective 2 percent interest rate to service the debt, say in 2011, our interest payment that year would have been closer to $296 billion.

But the total US public debt at the end of the 2011 fiscal year reached almost $14.8 trillion, and interest payments on that debt were actually $454 billion, implying an interest rate in excess of 3 percent, half again as high.

That's the real lesson of rising interest rates. A 50 percent rise in interest rates from 2 percent to 3 on a pile of debt that size means an increased interest expense of $158 billion. People who think rates can't rise that much very quickly haven't been paying attention to the recent experiences of Greece, Spain and Italy. For example in Spain interest rates paid on 10yr paper lept 50 percent in six months' time this year.

In Italy they lept over 35 percent in five months' time.

Third, while Peter Schiff is surely right when he warns that rising interest rates threaten to consume government revenues, leaving nothing for essential services, the sorry truth is that our interest payments on the public debt are really more like the interest-only payments on loans people took out during the housing bubble. Those loans were DESIGNED never to require principal payments, and so the buyers of those homes never built any real equity and never were on a path to retiring those debts. That's our federal government. We NEVER make principal payments on the money we borrow, and we effectively borrow the money we need to make the interest payments, and then some.

Instead of paying $454 billion a year in interest-only payments on the national debt, we should be on a path to retiring that debt. At 3.5 percent interest for 30 years, that would mean interest AND principal payments together totaling $864 billion a year, not $454 billion. And it would also mean: NO MORE BORROWING.

Can you imagine such an America? Of $2.8 trillion in current revenues, that would leave just $1.9 trillion for the feds to spend, 50 percent less than the $3.8 trillion and climbing which they spend now.

If there were any real conservatives in America, let alone in the Republican Party, that's what they'd be telling the American people. Anyone who tells you otherwise is just a pretender.

Another Voice Saying Rep. Paul Ryan Isn't Serious About Cutting Spending

Peter Schiff:

So what was the Ryan Budget's radical departure from the status quo that has caused such uproar? If enacted today, the Ryan budget would so drastically upend the fiscal picture that the U.S. federal budget would come into balance in just... wait for it.... 27 years! This is because the Ryan budget doesn't actually cut anything. At no point in Ryan's decades long budget timeline does he ever suggest that the government spend less than it had the year before. He doesn't touch a penny in current Social Security or Medicare outlays, nor in the bloated defense budget. His apocalypse inducing departure comes from trying to limit the rate of increase in federal spending to "just" 3.1% annually. This is below the 4.3% rate of increase that is currently baked into the budget, and farther below what we would likely see if Obama's priorities were adopted.

Read the whole thing here.

Who Needs A Bullet-Proof Vest When You've Got This?

"VP Joe Biden Is A Stock Looking For A Bottom"

As just stated by Larry Kudlow on WABC Radio.

Central Bank/Institutional Gold Demand Is Running at 630 Tonnes Annualized

The pace of gold acquisition by central bankers and institutions looks to have picked up over 50 percent in Q2 2012 over the 400 tonne-pace set between March 2011 and March 2012, according to this story:

Demand for gold from central banks and official sector institutions more than doubled in the second quarter of this year to 157.5 metric tons from the same quarter a year ago, according to a World Gold Council (WGC) report released Thursday.

That marked a record quarter for central bank buying since the sector began recording net purchases in the second quarter of 2009, according to the WGC report. Central banks in Kazakhstan, Russia, Ukraine and South Korea were among the big buyers.

If You Can't Spell 'Commodities' Don't Listen To Jim Rogers

So says Jim Rogers himself, here:

"But people – if they can’t spell commodities, they shouldn’t be listening to me. They should be doing what they know about."

How To Tell Who Is Winning

If the debate we're having is about taxes, the liberals are winning. If it's about spending, the conservatives are. Just never forget that winning isn't the same thing as success.

Oil Is Still "On Sale"

Oil is still "on sale", but the discount relative to gold has declined a little bit.

The gold to oil ratio stands at 16.8, which represents a mark-down of roughly only 12 percent for oil. Gold has firmed up in the neighborhood of 1615 of late, presumably on central bank acquisitions replacing coin demand. And saber rattling and unrest in the Middle East continue to put pressure on oil prices, moving the ratio closer to the theoretical norm of 15.

We've had gold to oil ratios much higher than 15 in recent months, including hits of 19.5 and the like.  But I don't like oil and gold at any of these prices. I'm not acquiring these and I'm holding what I've got because I bought them low.

Assets remain inflated overall.

I Built This Blog, And Obama Can Kiss My Sweet German-American Ass

And I approve this message, too.

Praetorian Guard Openly Turns On Obama

The owner of a Virginia business said 'No' to a visit by VP Joe Biden because of Obama's 'You didn't build that' remark, so the Secret Service detail for Biden went in and bought a bunch of stuff to thank him, according to this local story:

Here's the back story, we’re told that shortly after Crumb and Get It told Biden’s advance people 'no' -- the secret service walked in and told Chris McMurray ''Thanks for standing up and saying 'no' -- then they bought a whole bunch of cookies and cupcakes.

McMurray said he's hoping folks will understand he just didn't want to be part of a photo op for an administration whose policies he doesn’t agree with.

GIVE US YOUR COLLEGE TRANSCRIPTS!

The New York Times Uncorks The Wildest Slur Yet Against The Tea Party

Suddenly the Tea Party is the most selfish, arrogant and yet servile lot on the planet, according to one Jennifer Burns, an assistant professor at Stanford, for The New York Times, here:

". . . the Tea Party, whose members believe they are the only ones who deserve government aid."

Wow. Haven't heard that one yet. Is that what it takes to get tenure at Stanford these days? The intimate connection she divines between the Randians and the Tea Party is, quite simply, the sort of fantasy one might expect of someone trying to find something new to say. Not that the Shruggers wouldn't like to co-opt the Tea Party. They would, and they are trying, as is the Republican Party's Dick Armey, which is enough to give anyone who has watched them from the beginning the staggers. The spontaneous revulsion of common, everyday folk in America to the designs of their elected leaders provoked the reaction which is the Tea Party, most of which is as non-ideological as a hamburger. 

I dunno, maybe she's confusing the Tea Party with Occupy Wall Street, some of whose members are infamous for demanding student loan forgiveness, and the right to poop on your stoop.

Just two years ago in Slate Mark Gimein could reasonably characterize the Tea Party as "the responsibles" who rose up against "the deadbeats", homeowners who had stopped paying on their mortgages and wanted bailouts from the Obama regime even as millions of underwater homeowners continued to pay on theirs.

I guess Jennifer is fairly new to the planet.

Russian Attack Sub Punks Obama's Navy In Gulf Of Mexico For A MONTH

Spending hundreds of billions of dollars abroad on nation building and protecting US interests in Europe, East Asia and the Persian Gulf, Obama's US Navy continues to go to hell in a handbasket, and along with it the very security of the US mainland.

A Russian attack sub operated undetected in the Gulf of Mexico for weeks in June and July, armed with nuclear-warhead-equipped cruise missiles in easy range of Kings Bay, Georgia:

The U.S. Navy operates a strategic nuclear submarine base at Kings Bay, Georgia. The base is homeport to eight missile-firing submarines, six of them equipped with nuclear-tipped missiles, and two armed with conventional warhead missiles. ...

The Navy is facing sharp cuts in forces needed to detect and counter such submarine activity.

The Obama administration’s defense budget proposal in February cut $1.3 billion from Navy shipbuilding projects, which will result in scrapping plans to build 16 new warships through 2017.

The budget also called for cutting plans to buy 10 advanced P-8 anti-submarine warfare jets needed for submarine detection.

Bill Gertz has the story here, detailing the growing threat being orchestrated by our Russian enemy Vladimir Putin in our own backyard in the Gulf of Mexico, and in the arctic. 

Romney May Well Tax Interest Earned On Life Insurance And Municipal Bonds

So says The Wall Street Journal, here, which approves as a way of helping pay for Romney's proposed across the board 20 percent tax cuts.

Without saying, of course, that this will shift costs from the rich who buy most of these bonds onto the broad base of taxpayers, in the form of higher taxes raised through property taxation. Property taxes will necessarily have to be increased because municipalities will have to pay more to borrow for spending on infrastructure, schools and the like without a ready pool of incentivized investors, i.e. the wealthy.

Municipal bonds are tax exempt for a reason: it makes borrowing cheaper and therefore taxes lower on the people who directly benefit from the spending. So what if the wealthy also benefit thereby? They should, and they do. For every bit of tax-free income the wealthy enjoy, someone somewhere has decent roads, schools and fire protection. It's not like the voters don't get to say No to such local spending. Property tax referenda are the meat and potatoes of local politics. 

This kind of cost-shifting was pretty much Romney's m/o in Massachusetts, where he made it almost an art form, increasing fees on businesses under the rubric of equalization, and on property tax payers of all kinds. Americans can probably expect the same from a President Romney, except on a much larger scale. It won't be spreading the wealth around to make people equal, it'll be spreading the taxation around, eliminating "loopholes".

Taxing interest gains from life insurance plans is a case in point. It will hurt any beneficiary of such plans, not just the rich. Think of a wife left with young children to raise, who will have just a little less left from her dead husband because she had to pay her fair share. And imagine having to pay tax on that life insurance when the buyer was counting on it to pay the taxes due on his estate so that his heirs wouldn't have to sell assets to do so. Talk about throwing a monkey wrench into the estate plans of countless millions.

Push here, and it comes out there.

Are Americans really going to vote for someone who is already getting bogged down in the weeds of tax loss expenditures? All Obama has to do in response to this is say Republicans are going to take away your tax deductions. This is not the way to sell the Republican brand.

As tax loss expenditures go, the two together add up to $90 billion annually in lost government revenue and benefit mostly the wealthy, according to an AEI source quoted in the editorial. Nevermind the $3.8 trillion we're already spending in this fiscal year is itself "lost government revenue".

Republicans ought to be saying every dollar spent by government is lost.

Don't hold your breath. 

David Stockman Misses An Opportunity: The Warfare State IS The Welfare State

The New York Times is only happy enough to run an op-ed from David Stockman, here, attacking the phony conservatism of the Republican Party since Ronald Reagan, in which he rather relishes pointing out, among other things, that when push came to shove Rep. Paul Ryan "folded like a lawn chair" and voted for TARP:

Thirty years of Republican apostasy — a once grand party’s embrace of the welfare state, the warfare state and the Wall Street-coddling bailout state — have crippled the engines of capitalism and buried us in debt. Mr. Ryan’s sonorous campaign rhetoric about shrinking Big Government and giving tax cuts to “job creators” (read: the top 2 percent) will do nothing to reverse the nation’s economic decline and arrest its fiscal collapse.

Mr. Ryan professes to be a defense hawk, though the true conservatives of modern times — Calvin Coolidge, Herbert C. Hoover, Robert A. Taft, Dwight D. Eisenhower, even Gerald R. Ford — would have had no use for the neoconconservative imperialism that the G.O.P. cobbled from policy salons run by Irving Kristol’s ex-Trotskyites three decades ago. These doctrines now saddle our bankrupt nation with a roughly $775 billion “defense” budget in a world where we have no advanced industrial state enemies and have been fired (appropriately) as the global policeman.

Mr. Stockman never once calls this Republicanism what it is. I suppose if he had the Times wouldn't have printed it. And I don't know how he really could since his family is allied with liberal social positions anyway. Paul Ryan isn't the only phony conservative liberal around.

But the truth is (someone's got to say it) the warfare state since Reagan is another consequence of liberalism, expressed as a failure of nerve with respect to conscription. Good wars are wars for which Americans more or less readily submit to the draft, fight successfully and end relatively quickly. They have the consent of the governed and are representative wars, conducted as they are by a cross-section of the population. Bad wars don't have the consent of the governed. And so these must emphasize among other things protecting warriors and civilians, not destroying the enemy's ability to make war, and are all too often fought to draws after protracted efforts. These cannot be conducted except with compliant volunteers, who come from more or less distinct sectors of American society: the South, and poor minorities. And these volunteers require enducements in addition to a commitment from government to their safety, such as citizenship, a college education, or a pension. As in the private sector, the military's single biggest cost is personnel, which explains perhaps more than anything the drive to mechanized war in a new form, the vanguard of which is drone technology. Can The Terminator be far behind?

The war in Afghanistan would be long over if we had destroyed its infrastructure, annihilated its people, and salted its poppy fields. But we couldn't do that. That would have been a war crime. And besides, where we would get our drugs then?

Liberalism, you see.


"Yet Reason frowns on war's unequal game,
Where wasted nations raise a single name,
And mortgaged states their grandsires' wreaths regret,
From age to age in everlasting debt;
Wreaths which at last the dear-bought right convey
To rust on medals, or on stones decay."

-- Samuel Johnson

Monetarist Ambrose Evans-Pritchard Eats Keynes For Dinner, Austrians For Dessert

Frustratingly inconclusive and full of explanatory power at the same time, here:

Monetarists blame the ECB and the Fed for keeping money too tight in early to mid 2008, pushing a fragile credit system over the edge. They blame “pro-cyclical” regulators for aborting recovery ever since by forcing banks to raise asset ratios too fast. They are right on both counts.

Yet the `Austrian School’ is surely right as well to argue that a rise in debt ratios across the rich world from 167pc of GDP to 314pc in just thirty years was bound to end badly. There comes a point when extra debt draws down prosperity from the future. The future arrived in 2008.

How Would You Like A Monthly Mortgage Payment Of $72 Billion?

That's what it would take to pay off the total public debt of $16 trillion, financed at 3.5 percent, in 30 years: $25.920 trillion in total payments ($16 trillion principal/$9.92 trillion interest).

Got any collateral?

Notice The Subtle Anti-Reaganism Of Sen. Tom Coburn (R-OK)

TARP Republican

Sen. Tom Coburn comes to bury Caesar, not to praise him, here:

"The last time Congress reformed the tax code was 26 years ago, which preceded the longest peacetime economic expansion in our history."

What's wrong with that? you say.

Well, that statement dates the longest peacetime economic expansion in our history from after 1986, ignoring that it actually began much earlier as a result of Reagan's stimulative tax cuts in the early 1980s. Now why would a Republican ignore that? Maybe because he's a Bush Republican who hates voodoo economics, the ungrateful louts who never defended the Gipper against the left's attacks then and still won't.

What's worse is that Sen. Coburn goes on to pretend that Reagan viewed tax credits with scorn like Martin Feldstein does:

Reagan’s key economic advisers such as Martin Feldstein persuasively argue that tax extenders are spending by another name. If tax carve-outs for green industry, rum makers, Eskimo whaling captains, and more, were on the other side of the ledger – such as in President Obama’s stimulus bill – they would be derided as spending, and rightly so.

Actually, Reagan defended spending through the tax code, for example, through the Earned Income Credit which he expanded considerably in the very 1986 tax reform Coburn praises, to get people off of welfare and into work.

Martin Feldstein may have been Reagan's economic advisor, but he was a deficit hawk who often collided with Reagan over spending, and left the service of the president after only two years, in 1984.

To rewrite the history of Ronald Reagan as Coburn does is completely dishonest.

Obama's Enthusiasm For Bailouts Becomes National Socialism in Colorado Remarks

Obama views the GM auto bailout as an example of a successful government investment in the private sector, never mentioning, of course, that the success is at the expense of the former private investors in GM, its non-union elements, and of the tax-paying public. Without those, GM is still a failure, and should be again.

That Obama now says in Colorado that he wants to similarly rescue more companies, however, indicates that the bailout model was more to him than a one-off which he fortuitously inherited from the Republican establishment, an intellectually lazy cohort of Baby Boomers which long ago had betrayed free market principles. Obama's commitment to a model of government superintendence of private industry marks a new public face for an old familiar mixture of State and industry, the inspiration for which Herbert Hoover noted in his memoirs FDR had derived from Mussolini and the other strong men of Europe.

We all know what is the result of this type of thinking because we've already experienced it, not just in FDR's long failure, and not just in the recent auto company bailouts, but also in the rescue of the financial industry:

• more moral hazard which has allowed so-called private banking players like the five or ten biggest banks to take even more unwarranted risks and grow ever larger and more too big to fail than ever, knowing the public purse is backing them up;
• taxpayer-funded bailouts whose pain is never really felt by the taxpayers because, like most public spending, the bailouts are simply financed by more borrowing, which in their turn have only worsened the fiscal health of the nation and contributed to the loss of its once vaunted AAA rating;
• corruption of elected public officials and bureaucrats whose crimes destroy the public's consent to be governed, as witnessed by the rise of protest movements like the Tea Party and Occupy Wall Street, and by the capital strike by individual investors;
• picking winners like multinational GE and Wall Street firms who reaped huge rewards in the form of tax breaks and bonuses because of their close relationship with government, and therefore by definition also picking losers on Main Street like small banks and entrepreneurs who can't beat the system because it is rigged against them, crushing confidence in "capitalism";
• a complete repudiation of free market principles in which failure and bankruptcy become as unacceptable as saying "No" to the kids or as marking an "F" on a report card, unless for unrelated political reasons your industry happens to become a target for elimination, you know, like Chick-Fil-A, or the Roman Catholic Church in America.

Perhaps the most interesting thing about Obama's remarks in Colorado is the way he is now touting his commitment to this model in explicitly nationalistic terms, emphasizing his as a patriotic concern for the American people to bring their jobs home, and Romney's as an unpatriotic intent to export those jobs.

Obama's socialism has been deemed a distraction by establishment Republicans, who find all the purported links between Obama and the communist left made by conservatives just a little too disturbing for polite conversation. It reminds them too much of the McCarthy era. But now explicitly linked to nationalism, Obama's remarks become an opportunity to refocus the conversation on the coincidence of these elements in fascism, which the left has hitherto succeeded in attacking and marginalizing as a phenomenon of the right, of conservatism.

Locating Obama in fascism actually makes better sense of his presidency to date. It explains the disillusionment of the left with him as a sell-out who has had the temerity to spend so much of his time enjoying himself instead of pushing their agenda, crafting policy to maximize campaign contributions from favored industries, and throwing his weight around as Commander In Chief. After one year progressives were already ridiculing his administration as a squandered presidency. And fascism also coheres with the interpretation of his experience in Chicago where he allied himself with financial, insurance and real estate interests and the Democrat Party to take over the property of the South Loop,  enrich themselves, and further their political careers. The president's friendship with Jeffrey Immelt is not a bug. It's a feature. 

The historical reality is that the fight between the communists and the fascists was always a fight on the common ground of socialism, rather like the fight between Democrats and Republicans has been a fight on the common ground of liberalism. The radicalization which occurred in the arguments between socialists culminating in the Second World War occurred because the conservatism of a prior monarchical age had completely lost its tempering force in society. The civilization of Europe was completely overcome from within by a capitulation to eschaton-immanentizing ideologies before it destroyed itself from without in war. In that process, liberalism was the vanguard softening up the enemy for the totalitarianism to come. Conservatism was beside the point then, but not here, not now.

In the arguments between Democrats and Republicans in our time, matters have not yet degenerated into such violence because the unique contributions of conservatism from the American Founding still inform much of the body politic. And the most important of those contributions, derived from human and religious experience both, has been the self-limiting conviction that human nature is not perfectible and always remains a mixture of good and evil which no rearrangement of human affairs can alter.  In the person of Barack Obama, however, we have met with someone who explicitly asserts otherwise, as an ideologue, that the union is perfectible. He deliberately goes out of his way to attack those individuals and institutions who know, believe and say otherwise. And armed with the imperial accoutrements gathered by his predecessors in the presidency, one might say that the people actually face for the first time a real and foreign threat in charge of the executive, a foreigner in his heart, mind, and affections who keeps his past sealed precisely because the revelation that he once presented himself as a foreigner for his own advantage even though he was born in Hawaii would offend more than actually being a foreigner.

Liberalism is defenseless against this because it drinks from the same cup of idealism. This is why it keeps quiet and doesn't look too deeply into President Obama. It is afraid it might see its own reflection. And this is also why a liberal like Mitt Romney can't bring himself to entertain Obama's socialism, let alone his national socialism. If it worked, he'd actually agree with it.

ABC News has the most recent formulations of Obama's national socialist vision here:

"When the American auto industry was on the brink of collapse, more than 1 million jobs at stake, Gov. Romney said, let’s ‘let Detroit go bankrupt.’ I said I believe in American workers, I believe in this American industry, and now the American auto industry has come roaring back and GM is number one again. So now, I want to do the same thing with manufacturing jobs, not just in the auto industry, but in every industry. I don’t want those jobs taking root in places like China. I want them taking root in places like Pueblo.  Gov. Romney brags about his private sector experience, but it was mostly investing in companies, some of which were called “pioneers” of outsourcing.  I don’t want to be a pioneer of outsourcing.  I want to in-source.  I want to stop giving tax breaks to companies that are shipping jobs overseas.” ...

"When the American auto industry was on the brink of collapse, 1 million jobs at stake, Mr. Romney said, ‘Let Detroit go bankrupt.’  I said, let’s bet on America’s workers.  And we got management and workers to come together, making better cars than ever. And now, GM is number one again and the American auto industry has come roaring back.   So now, I want to say what we did with the auto industry, we can do it in manufacturing across America.  Let’s make sure advanced, high-tech manufacturing jobs take root here, not in China.  Let’s have them here in Colorado.  And that means supporting investment here.”

Projected Unemployment Rate For August 12, 2014 Is 8.9 Percent

As calculated here:

Conservatives Outnumber Liberals 2 To 1: If Only They Knew What That Meant

and sigmas aren't what they used to be at Cambridge

So Gallup, in January, here:

PRINCETON, NJ -- Political ideology in the U.S. held steady in 2011, with 40% of Americans continuing to describe their views as conservative, 35% as moderate, and 21% as liberal. This marks the third straight year that conservatives have outnumbered moderates, after more than a decade in which moderates mainly tied or outnumbered conservatives.

In America you can be whatever you want to be, even if you're not what you say you are.

You know, like the Baptist preacher down the street who fancies himself a Greek scholar but misspells the English on his road sign.

Ryan Is No Conservative: He Voted For The Biggest Entitlement Program Since The 1960s

Rep. Paul Ryan, Republican from Wisconsin, Gov. Romney's VP nominee, is a huge friend of the welfare state and is no conservative.

Not only did he vote to bail out the banks and everyone else in 2008, in 2003 he voted for the largest expansion of government entitlement since the 1960s when he said "Yes" to Drugs For Seniors.

If he has any principles, they don't animate his votes when it's time to roll back liberalism. Instead, he rolls with liberalism when push comes to shove. Which is why Romney picked him. A man after his own heart he is.

Conservatives don't say "Yes" to Mitt Romney. Conservatives say what they said in South Carolina:

WE DESPISE MITT ROMNEY TO THE VERY CORE OF OUR BEING.

Scott Rasmussen Says Most Americans Think Both Parties Are Fascists

They just don't say it that way. Instead they call the two parties crony capitalists.

Here is Rasmussen for the Boston Herald:

[S]even out of 10 Americans believe government and big business work together against the rest of us.

In other words, Americans believe crony capitalism is a reality regardless of which party is in the White House. This is the root cause of much of the frustration sweeping the nation today. ...

[T]hey want the government to stop picking winners and losers in the business world.

Looking The Part

Don't Vote For The Fascists. It Only Encourages Them.

Three Tax Collectors For The Welfare State (And One Nincompoop)

US Public Debt Under Obama Has Soared Exactly 50 Percent In 43 Months

(Source: little Timmy Geithner's Treasury Department)

Romney Doesn't Oppose Obama's Financier Fascism, He's Part Of It

"[D]espite taking office in the midst of a massive financial meltdown, Obama’s administration has not prosecuted a single heavy-hitter among those responsible for the financial crisis. To the contrary, he’s staffed his team with big bankers and their allies. Under the Bush-Obama bailouts the big financial institutions have feasted like pigs at the trough, with the six largest banks borrowing almost a half trillion dollars from uncle Ben Bernanke’s printing press. In 2013 the top four banks controlled more than 40 percent of the credit markets in the top 10 states—up by 10 percentage points from 2009 and roughly twice their share in 2000. Meantime, small banks, usually the ones serving Main Street businesses, have taken the hit along with the rest of us with more than 300 folding since the passage of Dodd-Frank, the industry-approved bill to “reform” the industry. ...

"In a sane world, one would expect Republicans to run against this consolidation of power, that has taxpayers propping up banks that invest vast amounts in backing the campaigns of the lawmakers who levy those taxes. The party would appeal to grassroots capitalists, investors, small banks and their customers who feel excluded from the Washington-sanctioned insiders' game. The popular appeal is there. The Tea Party, of course, began as a response against TARP. ...

"Romney himself is so clueless as to be touting his strong fund-raising with big finance. His top contributors list reads something like a rogue’s gallery from the 2008 crash: Goldman Sachs, JPMorgan Chase, Morgan Stanley, Credit Suisse, Citicorp, and Barclays."

Read the whole thing from Joel Kotkin, here.

Obama's Gangster Auto Tsar Admires China, The Largest Expression of Crony Capitalism In History

As pointed out by Joel Kotkin for The Daily Beast, here, who refrains from using the still radioactive term "fascist" in lieu of which the euphemism "crony capitalism" will still have to do:

Obama’s financial tsar on the GM bailout, Steven Rattner, took to The New York Times to stress that Obamians see nothing systemically wrong with the banking system we have now, blaming the 2008 market meltdown on “old-fashioned poor management.” ... 

Rattner ... paid $6.2 million and accepted a two-year ban on associating with any investment adviser or broker-dealer to settle with the SEC over the agency’s claims that he had played a role in a pay-to-play scheme involving a $50,000 contribution to the now-jailed politician who controlled New York State’s $125 billion pension fund. He’s also expressed unlimited admiration for the Chinese economic system, the largest expression of crony capitalism in history. Expect Rattner to be on hand in September, when Democrats gather in Charlotte, the nation’s second-largest banking city, inside the Bank of America Stadium to formally nominate Obama for a second term.

Relative to Gold, Oil is Still ON SALE

The gold to oil ratio stands at 17.44, meaning oil is "on sale" relative to the price of gold.

Low Tech Auto Security System