Barry Ritholtz Can't Take It That Fellow Liberal Bloomberg Blames Congress For '08 Meltdown

In The Washington Post, here.

In the end, I think this is because of two things. One, a bias toward liberalism, the finger prints of which are all over the current crisis, so Barry can't stand it when one of his own departs from his version of the accepted narrative and puts the blame on liberalism's institutional face. And two, a widespread intellectual failure affecting liberals, conservatives and independents alike, which conflates the free market and the banking sector:

The previous Big Lie — the discredited belief that free markets require no adult supervision — is the reason people have created a new false narrative.

The banks are beholden to a fiat currency mediated by a fiat central bank fed by a government printing press. They are by no means a private sector player, and haven't been since 1913. Banking isn't a free market, it does require adult supervision, and the taxpayers should be outraged by the on-going failure of it every goddamn Friday night. Congress willingly acceded to this failure in the 1990's under Clinton and the Republicans when they gave banks free reign over money creation. The Federal Reserve became beside the point. It only took a decade to implode.

To paraphrase Russell Kirk: Free markets aren't a failure, they just haven't been tried recently.

Off the Hook

Remove the taxpayer guarantee and put bankers personally on the hook, and that will change things for the better in a hurry. 

Seal Target Geronimo Insists bin Laden Was Not Murdered, Obama Blew Intel For Political Gain

Read all about it, here.

Famous Serial Monogamists of Conservatism

(source)

The Anti Heritage Foundation Line of the Day

"Heritage’s economic policies are reasonably free-market, at least when Democrats are in power."

-- Ryan Young, here 

The Broadest Tax Base Which Can Possibly Be Imagined Implies a Tax Rate of 6.2%

Herman Cain's 999 Plan is focusing attention on the perennially perplexing problem of taxation for the American electorate in 2012. His plan has brought questions about broadening the tax base for tax reform front and center, including: What tax base is large enough to generate adequate federal revenues? and: What rate of taxation is fair?

Herman's big idea is to scrap the entire tax code and start over with three new bases taxed at the same low rate for a temporary period of time, eventually transitioning the country permanently to just one of these bases, taxed at a much higher single rate.

His scheme is quite conventional in that it looks to the existing traditional bases of taxation with which we have been familiar for decades: corporations and individuals.

What is new, however, is the national sales tax, the base for which was fairly sizable in 2008 at $10.1 trillion in personal consumption expenditures [PCE], and running at almost $10.8 trillion annualized through August 2011.

Currently the overwhelming burden of taxation falls on the individual filer whose personal income is taxed in order to provide Social Insurance and Federal revenues, which in 2011 are currently running at an annualized rate of $2.3 trillion, as shown here by the Bureau of Economic Analysis. Corporations, excises and tariffs provide puny sums by comparison: less than $500 billion in 2008.

This means that in 2011, Herman Cain's ultimate idea of taxing consumption to replace current revenues of approximately $3 trillion would imply a national sales tax rate of 28 percent on $10.8 trillion in goods and services expenditures this year. That's a pretty hefty rate by comparison with present conditions.

Currently the personal income base on which we exact that $2.3 trillion in Social Insurance and Federal taxes is just over $13 trillion. This implies an overall tax rate of 18 percent. If personal income in that aggregate amount had to do all the pulling to generate the full $3 trillion in revenues, personal income would have to be taxed at a rate of 23 percent to do the same thing as the consumption tax. Not as high, but still much higher than the 9 percent Herman Cain has called for currently, if only temporarily, in deference to the God of the Bible who asked for just 10 percent from his chosen people.

By way of comparison, if there were some way to easily tax GDP, currently running at $15 trillion, the effective tax rate would have to be 20 percent.

So is there a tax base which is broader still, from which we can derive the necessary sums and get that rate even lower?

Given that people by definition receive income in consequence of the conduct of business of one kind or another (aside from gambling, prostitution and bank robbery), it seems reasonable to look at the size of the various tax bases available strictly from businesses, without whom none of the other tax bases would exist in the first place. If we really mean it when we say we want to tax income only once, we need to go to its source, and for nearly everyone in our society, that source is business.

Corporations in 2008 had total receipts of $28.5 trillion, 2.8 times the size of Herman Cain's PCE tax base. It would have taken a gross receipts tax of merely 10.5 percent on this sum to have generated $3 trillion in tax revenue in tax year 2008, a year when revenues were actually lower at $2.5 trillion. That implies a gross receipts tax of only 8.8 percent on corporations in 2008.

In such a world, there would be no more income taxes on individuals, no Social Security or Medicare taxes either, and no capital gains taxes nor taxes on investment income or savings of any kind, and government would not go wanting. Nor would business be constrained by other taxes and fees imposed on it if we were to throw out the current code and replace it with this simple levy.

But the base could be made broader still in order to lower the effective rate even more.

Add in partnerships, which had $5.9 trillion in total receipts in 2008. And S corporations, which had $6.1 trillion in total receipts in 2008. Both of these added to corporation total receipts yields a gargantuan tax base for 2008 of $40.5 trillion in gross receipts.

All of that could have been taxed at a mere 6.2 percent to meet the federal revenue of $2.5 trillion collected in 2008.

No more talk of a flat income tax, nor of a progressive income tax, nor of a consumption tax. No more compliance costs of $450 billion because of the current code. No more lost time equivalent to 3 million full time jobs.  Just one, low, simple, rate on business. That's it.

In addition to God, John Tamny might go for it, too:

"The answer as always is for the government to simply get out of the way. If it must tax corporations, its taxation should be blind in the way that justice is. A flat gross receipts tax would make all corporations equal before the IRS. That would ensure the most economic allocation of capital on the way to rational, market-driven growth."

Herman Cain's Consumption Tax Is Firmly Rooted In The Framers' Original Intent

Lawrence Hunter for Forbes provides an excellent primer on the Framers' argument for indirect taxation, which is to say taxation on consumption, showing how such taxation was chosen by them on purpose because it is by nature self-limiting, which is a necessary predicate to limited national government:

Hamilton’s exposition in Federalist #22 illustrates the sophistication of the theory of political economy that informed the original constitutional design, which gave rise to a constitutional pincer holding the national government firmly in check.  History has borne out the Framers’ expectations that taxes on consumption are to a large degree self-limiting, while direct taxes know far fewer limits.  In the case of the original Federal design, the self-limiting tendency of indirect taxes on consumption augmented the other arm of the constitutional pincer—limiting the national government solely to the exercise of delegated powers—to make unnecessary other specific constitutional limitations on the national government’s taxing and spending authority, i.e., explicit taxing, spending and borrowing limitations.

The whole thing, here, is must reading.

31 Percent of Occupy Wall Street Protesters Support Violence to Advance Agenda

Doug Schoen has the results of his survey, here, concluding that Occupy Wall Street is:

a group of engaged progressives who are disillusioned with the capitalist system and have a distinct activist orientation. Among the general public, by contrast, 41% of Americans self-identify as conservative, 36% as moderate, and only 21% as liberal.

Establishing a Motive for the Norway Shooter's Crimes

The motive appears to be a political response to left-wing anti-Semitism, if the details of the alleged shooter's biography reported widely are accurate.

The bombing in the land of Quisling looks like an elaborate diversion designed to provide cover for the real operation, which was to murder as many members as possible of the youth arm of the left-wing, anti-Israel Norwegian Labor Party, being groomed at their summer camp for future service:

The Workers' Youth League (Bokmål: Arbeidernes Ungdomsfylking, Nynorsk: Arbeidaranes Ungdomsfylking, or AUF) is the youth organization affiliated with the Norwegian Labour Party.

AUF was formed in April 1927, following the merger of Left Communist Youth League and Socialist Youth League of Norway. It's [sic] ideology is social democracy and democratic socialism. The current leader is Eskil Pedersen. Many former leading figures in AUF have gone on to serve in significant positions in government, such as the incumbent Prime Minister of Norway, Jens Stoltenberg.

A survivor of the shooting explains what all those kids were doing on that island where the murders occurred:

What can I say? The last normal thought in my head was about the AUF´s organization of students. I had just been to a political workshop (that´s what we do at Utøya) – and was on my way up tp [sic] the AUF-shop where I was going to take a shift. ...

Blowing up important buildings in Oslo and killing the future politicians of the Arbeider-party (ed. AP) who are attending summercamp at Utøya. What wrong have we done?

Those who resort to violence have run out of arguments. How could he do this to my AUF-friends? It seems so surrealistic. I don´t understand. I can´t comprehend.

She doesn't understand because she has been taught not to. This formal, political indoctrination of the young is designed to pave the way for the strident, anti-Semitic views of the Norwegian Labor Party, as detailed here, here, here, here and here. Which goes far to explain what could possibly motivate an extremist fanatic of the opposite persuasion, equally misguided, in this case a loner with delusions of grandeur.

[A] young man is not a proper hearer of lectures on political science; for he is inexperienced in the actions that occur in life, but its discussions start from these and are about these; and, further, since he tends to follow his passions, his study will be vain and unprofitable, because the end aimed at is not knowledge but action. And it makes no difference whether he is young in years or youthful in character; the defect does not depend on time, but on his living, and pursuing each successive object, as passion directs. For to such persons, as to the incontinent, knowledge brings no profit; but to those who desire and act in accordance with a rational principle knowledge about such matters will be of great benefit.

-- Aristotle, Nicomachean Ethics 1.3, here

Progressive Taxation: What Would Jesus Take?

The short answer is: all of it.

The long answer is more complicated.

Rush Limbaugh was a little ticked off a while back because liberals were asserting that Jesus would raise taxes, especially on the rich, which is, of course, a complete caricature of Jesus' teaching. Jesus wouldn't just raise taxes. He'd have made them completely irrelevant. For everyone.

The fact of the matter is, Jesus advocated complete liquidation of one's assets as a condition of discipleship. And after one did so liquidate, one would have no job to tax, either, because one would have to leave one's job to follow him.

Read the famous story about the rich man in Mark 10, paralleled in Matthew 19 and Luke 18, whom Jesus instructed to "sell whatsoever thou hast, and give to the poor." Liberals like to stop right there, with the obligations this story places on the rich.

Few like to reckon, neither liberals nor Christians it must be said, with Luke 14:33: "Whosoever he be of you that forsaketh not all that he hath, he cannot be my disciple."

Or with the calling of The Twelve Disciples, who left all and followed Jesus at his command, wandering around Galilee and Judea for something between one and three years until Jesus met his coup de grace, leaving their families unsupported for the time and becoming deadbeat dads in the process. A fine lot, they.

The truth is Jesus had only these 12 takers, and all of them proved to be something of a disappointment in the end, to say the least. Everyone else he called to discipleship found it a bit of a stretch, and followed at a distance, as it were, especially if a miracle feeding looked to be in the offing. The analogy would be to the Jewish proselytes to whom Paul preached his gospel, which they found rather more attractive than that whole circumcision thing required to become Jews.

Jesus' radicalism makes a certain kind of sense if the end of the world and The Final Judgment is just around the corner, which, of course, would make practical concerns beside the point. "Take no thought for your life, what ye shall eat, or what ye shall drink; nor yet for your body, what ye shall put on." "Some of you standing here will not taste death before you see the kingdom of God come with power."

This is the sort of stuff from which progressive liberalism, inspired by 19th Century liberal Christianity, tried to salvage something, denuded as it was of its supernaturalism and its apocalypticism. Inappropriately inserting their interpretation of a timeless Christian religion into American life, the progressives advocated a moral sensibility based on an unhistorical reading of the history of the religion, pretending all the while that only fundamentalists sought to impose a theocracy on America. In view of the high rates of taxation they came to advocate starting from 1913 (see here), one would almost gladly settle for the fundamentalists' theocracy with its tithe. What rich man in America wouldn't kill for a 10 percent tax rate?

Progressive taxation is a Christian heresy, arbitrarily ratcheting up the cost of discipleship citizenship the richer one gets, but never quite taking all the money, and never really justifying the varying costs in any given year, nor from year to year. Why is the price of entry at a lower rate for a relatively poorer rich man than for a richer rich man? Oh, progressivism tries to pretty this up with sayings of Jesus such as "To whom much is given, much is required" and the like, but at the expense of the full record which shows that Jesus demanded the same from everyone: a complete turning of one's back on one's former existence, no matter how great or how small by human standards of measurement. The Christian conception for this turning was summarized in a single word: "repentance." By contrast the paying of taxes in America is merely with reluctance.

In addition to this heresy, progressivism offers a related one which asserts that a better, improved future is just around the corner for all, if only the rich pay their fair share. This promise of an immanentized eschaton is a bastardized version of Jesus' belief in the coming sudden end of the world and of the in-breaking of the kingdom of God. But the reality is, like the prediction of the end of the world before it, the progressives' expected bright future never arrives, no matter how much money they throw at it.

The message of Jesus was much more stern and demanding than you will find in any church in America, or in the tax-writing committees of the Democratic caucus for that matter. Jesus' message was both much more pessimistic and much more undemocratic than most Americans would care to hear, which is why you don't hear it. It assumes that though many may be called, few end up being chosen. "Narrow is the gate and difficult the way that leads to life, and few there be that find it." (Note to Rev. Rob Bell).

To a significant degree, that pessimism about human nature naturally animated the American founding generation, which ever sought to restrain human evil by recourse to divided government and divided powers within it. They were as familiar with the weaknesses of human nature through their reading of ancient history, literature and philosophy as they were through their reading of the Gospels and St. Paul.

They knew better than most men before them or since that you can't make men good simply by passing laws.

Paul in particular had written that sin was not counted where there was no law, but that when the law came, sin revived, and he died. The analogy from the tax world is similar: If you want to witness tax evasion, multiply the taxes. So funding the new government was going to be at best a tricky business. Which is one reason I think the founders decided to export the sorry business of taxation the way they did, imposing tariffs on foreign trade to generate government revenues, instead of taxing the population directly. They knew it was better to raise the ire of the alien who could be kept at bay than the ire of the countryman who could not.

It's a lesson we need to relearn, and fast.  

Annual Cost to the Taxpayers of Earned Income and Child Tax Credits is $109 Billion

So admits the liberal Tax Policy Center, here:

Each year the earned income tax credit (EITC) and the child tax credit (CTC) deliver more than $109 billion of cash assistance, mostly to families with children.

There's corporate welfare, and then there's . . . well . . . welfare!

By contrast, the mortgage interest deduction costs the Feds about $88 billion in lost tax revenue annually.

And the rich don't pay Social Security taxes on any compensation beyond $107,000 in wages and salary each year. I estimate that loss to the Treasury at about $100 billion annually.

So, Solomon, which is worse?

Phyliss Schlafly Likes Herman Cain's Corporate Tax Reforms

As reported here:

We should reduce or eliminate taxes on businesses that employ Americans producing goods and services inside our own country, while increasing taxes on the profits that corporations earn by outsourcing or manufacturing overseas.

Above all, we should eliminate the foreign tax credit, a self-destructive provision that allows corporations to pay China, Venezuela or Saudi Arabia the money they would otherwise owe the U.S. government. Let's also cut out the deductions that U.S. corporations take for hiring foreigners to do work that Americans can do. ... 

Of Republican presidential candidates, only Herman Cain and Rick Santorum understand that what corporations need is lower taxes on their operations inside the United States rather than on the profits they earn in other countries.

The Economic and Social Value of the Joint Income Tax Return Produced the Baby Boom

So says Phyliss Schlafly, who thinks Texas Gov. Rick Perry's flat tax plan flattens the traditional family and rewards kinky couples, here:

The joint income tax return for husbands and wives was landmark legislation. The Republican Congress passed it in 1948 over President Truman's veto.

As originally designed, the joint return recognized a husband and wife as two equal partners, even if the husband earned all the family's income. Each tax bracket, deduction and exemption was equal to twice that of a single person.

Subsequent tax reform bills, especially the one signed by Richard Nixon in 1969, which also introduced the hated Alternative Minimum Tax, reduced the value of a joint return to only about 1.6 persons, while increasing the tax benefit of an unmarried "head of household" to about 1.4 persons. Simple arithmetic shows that a single parent with an unmarried live-in "partner" gets more favorable tax treatment than respectable married couples struggling to support their own children.

And by the way, the postwar "baby boom" happened during the 20-year period when married couples were fairly valued in the federal income tax. That's not coincidence; incentives matter, and America's marriage rate and birth rate plummeted after the value of the joint return was reduced.

Direct Taxes Are Limited To Taxes on Land and Improvements, and to Capitations

According to the opinion of Chief Justice Salmon Chase in Veazie Bank v. Fenno, 1869:

The question before the Supreme Court in this case was the constitutional validity of an act of Congress in 1866 imposing a 10 percent tax on the issuance of circulating bank notes by nationally chartered banks or by state chartered banks. ...

Chief Justice Salmon Chase delivered the opinion of the Court. The Court held the tax to be constitutional. ...

Chief Justice Chase turned to the historical record.

He pointed out that Congress had enacted taxes that were acknowledged to be direct. Those taxes were enacted in 1798, 1813, 1815, 1816, and 1861. In each instance the sums collected were apportioned among the states. The subjects of those taxes were, variously, lands, improvements, dwelling-houses, and slaves. Chief Justice Chase pointed out that Congress never considered taxes on personal property, contracts, or occupations to be direct taxes. He observed that slaves were not an exception because, even though many of the slave states had considered slaves to be real property, slaves were, of course, persons and subject to a capitation, which was direct.

Therefore, Chief Justice Chase concluded, Congress understood direct taxes to be limited to taxes on land and improvements, and capitations.

-- Alan O. Dixler, 2006 (here)

Kalle Lasn Thinks Anti-Semitic Viewpoints Deserve Free Speech Protections

Kalle Lasn said the following, quoted here, in response to a controversial photo spread in Adbusters Magazine pulled from Canadian magazine shelves last year:

"If you think that publishing side-by-side images of the Gaza and Warsaw ghettos is a valid expression of free speech, email the Canadian Jewish Congress and tell them to back off," Lasn wrote. "In Canada, we should be free to choose from a diversity of viewpoints and decide for ourselves what is anti-Semitic and what is a legitimate critique of Israel's occupation of Palestine."

The trouble with Kalle Lasn is that one gets the impression from him that Jews shouldn't occupy anything, including their own homeland.

Bill Clinton's Middle Class Tax Increase Meant the Rich Got a Bigger Piece of the Pie

Mark Perry seems to have missed a good story.

He's been talking recently about how the income share of the top 20 percent has been FLAT since 1994, as shown here.

What's more interesting, however, is the oddity that his charts show that the income share of the top 20 percent experienced a pronounced spike up between 1992 and 1994, which includes the first two years of the Bill Clinton administration.

Why did the richer get a bigger share of the income pie after Bill Clinton raised taxes on them in 1993?

Top marginal income tax rates had declined from 38.5 percent in 1987 to 28 percent in 1988, as shown here, and in 1991 another higher rate of 31 percent was added under Bush 41. But under Clinton in 1993 an additional marginal rate of 39.6 percent was added with the help of the Democrat controlled Congress. So higher marginal income tax rates prevailed, but the richer nevertheless got a bigger share of the income.

That doesn't make any sense. How did that happen?

The answer is Clinton's middle class tax increases.

For one thing, the cap on income subject to Social Security taxes was raised. That bumped up the limit on incomes on which the tax was levied. A tax increase for all wage earners. For another thing, the cap on income subject to Medicare taxes was removed. That meant no ordinary income could escape the tax any longer. Another huge tax increase. And thirdly, Social Security income beyond 50 percent up to 85 percent became subject to income taxation. Anyone taking Social Security income felt this, not just the rich. Another huge tax increase.

These were massive tax increases on wage earners, as opposed to those richer Americans who could take their income differently if need be, often in the form of capital gains, or from tax-free municipal bonds, or from tax shelters.

The net effect of the Clinton tax increase was that just about everyone in the four quintiles below the top 20 percent lost ground on income, which meant that the rich appeared to spike up in their share of the income pie. The regimentation in law of the tax increases on everyone altered and froze the aggregate shares of the income pie going forward, hence the flatness of those charts since 1994.

The truth was that Clinton's tax increase on the richer, who ended up shifting income to avoid taxation, masked a massive tax increase on everyone else, who couldn't shift their income if they wanted to, and they've experienced a smaller bite of the income pie ever since.

That's what expanding the tax base in tandem with raising rates will do.

Republicans, take note.

America's Biggest Militia is the National Rifle Association: 4.3 Million Members

SPLC Claims 500 Percent Growth in Active Patriot Militias

As reported here, in a story about the recent arrest of members of a so-called militia in Georgia:

“This is only the latest manifestation of the patriot militia movement we have seen grow since 2008,” said Mark Potok of the Southern Poverty Law Center in a phone interview. “In 2008 we counted 149 patriot militia groups operating in the United States—by 2010 that number had increased to 824—that’s a 500 percent increase. It’s hard not to notice that this jump coincides with both the rise to power of Barack Obama and the subprime mortgage collapse.”

Actually it's a 453 percent increase, but liberals never were very good at math.

For example, an illegal weapons charge against a Hutaree militia member was recently dropped, evidently because the FBI was using a ruler made in China which was short by an inch. We'll have to wait for defense statements on that one when the case finally comes to trial, two years after the arrests in March 2010 in the wake of the passage of ObamaCare.

The Georgia case is four old coots in what we used to call an old-fashioned conspiracy to commit murder, but in this day and age where everything is exaggerated to the superlative degree (I'm great!), the disgruntled federal employees' plot becomes a TERROR PLOT and their self-description as a MILITIA gets taken as seriously as Barack Obama's claim to be a Christian.

If the FBI could hear the conversation around the family dinner table every night since that Commie bastard got elected president, we'd all be in jail thanks to George Bush's anti-terror legislation now in the hands of a leftist ideologue.

The next thing you know the Southern Poverty Law Center will start counting well-armed husbands, wives and children as militias when all they are is FAMILIES.

Onward Christian soldiers!

Unemployment At or Above 9 Percent For 28 of Obama's 34 Months in Office

That's 82 percent of the time, most of which he has spent on more important matters, like interfering with your healthcare, campaigning for stimulus spending, campaigning, partying, campaigning, golfing and campaigning.

Did I mention he's spent a lot of time campaigning?

National Review's Exhausted Conservatism Incubates More Liberal Monetarism

As with Ramesh Ponnuru's call here at The New Republic (!) for more monetary loosening and fiscal tightening, a policy neither Democrats nor Republicans embrace.

He must be reading Ambrose Evans-Pritchard at the UK Telegraph since the financial crisis, who keeps calling for same.

He has no understanding of, and pays no attention to, the source of the explosion in debt in The Great Moderation, however, which was a civilizational commitment to misallocation of capital to housing. To finance it, money creation had to pass from the control of central banks to so-called private bankers.

It is they who have brought us to this pass with massive amounts of leverage, with Democrat and Republican accommodation all the way, in exchange for power, money and influence.

National Review is incapable of teaching such things because it's part of the problem, not part of the solution. No wonder Ramesh wanders.

US Bond Market at $35.3 Trillion for Q1 2011, Grows 2 Percent Since 2009

The overall bond market has grown in size by about $700 billion since 2009.

(source)