FOR THE REPUBLIC!: November 2011

Wednesday, November 30, 2011

Rejecting FairTax Part Two: What You Don't Know About FairTax

One need only look to the annual report of Safeway to understand the impact of 999 on grocery prices. Because the grocery business is incredibly efficient and there is significant competition, there are very, very low margins in the industry. The pretax profit in good years for Safeway is only about 2% of sales and the Federal income taxes therefore are less than 1/2% of sales. After making a reasonable guess based on other information in the Safeway annual report, the total Federal income tax plus Safeway’s portion of their employees’ payroll taxes is less than 2% of sales. Assuming that would all be passed through to the customer in the way of price reductions, the price of food must increase by about 7%.

This is, of course, in reference to the effect of a 9% tax. Consider this effect with a 30% tax!

Third: FairTax doesn't eliminate payroll taxes. It doubles them. Another inclusion stated in the FairTax legislation (see link at bottom), is the requirement that businesses pay the 30% markup on wages and salaries if the employee's services constitute a "taxable service", defined as:

A taxable service is used to produce, provide, render, or sell a taxable property or service if such property or service is purchased by a person engaged in a trade or business for the purpose of employing or using such taxable property or service in the production, provision, rendering, or sale of other taxable property or services in the ordinary course of that trade or business.

This definition is extended to also include "research, experimentation, testing, and development".

Translation: Since virtually every employee (other than a personal employee such as a maid or chauffeur) meets this definition, every employer will be required to pay a 30% tax on wages and salaries.

If this doesn't make you, the reader, jump away from FairTax right now, I don't know what will.

Fourth, this 30% markup on everything extends to purchases by state and local governments. Yes, you read that correctly: State and local governments will have to pay taxes to the federal government. This means two things to you: 1) Your state and local taxes will go up; 2) State and local governments will be in continuous debt to the federal government.

This brings us to the Fifth point: The claim made by FairTax advocates that FairTax would eliminate the Internal Revenue Service. This is false. As you can see in the FairTax bill (see link at bottom), the IRS would merely be renamed as two new agencies: The "Excise Tax Bureau" and the "Sales Tax Bureau" of the Department of Treasury. Some personnel would be transferred to the Social Security Administration to administer the prebate program (see "Eighth", below).

However, the responsibility of collecting the tax would be transferred to state tax departments. In other words, not only would state and local government be constantly indebted to the federal government, but would also be required to perform work for the federal government.

This bizarre arrangement has another implication: It paves the way for further federal intrusion into state affairs. Instead of Congress debating over ways to fund new mandates on the states, Congress will simply be able to place mandates on the states in exchange for a tax credit. Cash-strapped states (i.e. every state, currently) will accept these opportunities to lower their tax burden to the federal government.

Stated differently: You can kiss the Tenth Amendment goodbye.

Sixth: On the subject of Constitutional amendments, we encounter another problem with FairTax: The Sixteenth Amendment, which authorized the federal income tax. Adding a constitutional amendment is extremely difficult; it's even more difficult to repeal one. In the case of FairTax, in order to be constitutional, both would have to happen: The Sixteenth Amendment would have to be repealed, in order to prevent Congress from taxing both incomes and sales (and you and I both know Congress would do that if given a chance), and to authorize a federal sales tax. FairTax advocates believe the Constitution already permits a national sales tax. I disagree. The Constitution authorizes taxes which are limited in scope- excise taxes, which are currently applied to a specific category of goods- but does not authorize a universal tax on the sale of all goods and services. We already have enough problems with Congress assuming powers not expressly granted in the Constitution, without handing them another one.

Seventh: On the subject of federal power grabs, let's consider an implication of any (and every) sales tax. Governments use sales taxes to manipulate purchasing habits by exempting certain products from taxation. The states are limited in their ability to do this, however, since a price difference of 5-8% generally isn't enough incentive to change the buyer's mind about a purchase. The federal government's ability to manipulate purchasing habits is also currently limited to income tax credits, which can be claimed at the end of the year to partially offset the cost of a major purchase such as a hybrid car or a new home, months after the purchase is made. The ability to immediately alter the shelf price of items by 30% or more would give the federal government an unprecedented ability to centrally plan and manipulate the economy.

Eighth and last is the "Prebate". As shown in Part One, consumption taxes are highly regressive. In an attempt to offset this regressiveness, the FairTax proposal includes a "prebate", a check issued to every household in the United States, every month, to offset the amount of sales tax paid up to the poverty line.

This, of course, presents two significant issues:

1) Any argument that FairTax would reduce federal bureaucracy is patently absurd, given that this proposal means the federal government would now have to issue more than a billion 'prebate' checks every year;

2) The next time our government experiences a budget crisis (as we're experiencing now), there will no doubt be an effort to "means-test" the prebate- just as there are now proposals to means-test Social Security and Medicare. A "means-tested" prebate would amount to yet another welfare grant. Instead of working to reduce the cost and scope of the welfare system, this would only add to it.

In sum: In addition to all the problems with consumption taxes generally, FairTax would give us a stealth tax, embedded in the cost of goods and services, which uses 'fuzzy math' to conceal the true rate of taxation; FairTax would present insurmountable Constitutional issues; it would give the federal government unprecedent power to manipulate both the economy and state governments; and would pave the way for a costly new welfare benefit.

Folks, don't be hoodwinked by slick FairTax salesmen. Don't make the mistake of assuming (as many FairTaxers do) that anyone opposed to FairTax is a "closet liberal", or "opposed to change". And don't blindly accept any change just for change's sake.

You can read the full text of the FairTax bill presented to Congress (the most recent version) here.

Tuesday, November 29, 2011

Was Herman Cain Ever A Viable Candidate?

Multiple sources, including Drudge, are reporting that Herman Cain is 'reassessing' his candidacy as allegations of yet another sexual indiscretion have emerged.

On numerous blogs and in my Twitter timeline, I've seen an astounding number of people make the claim that these allegations are the only reason Cain may be dropping out. I wholeheartedly disagree: I don't think Cain ever had substantive support from any of the "power brokers" in GOP politics.

On gun rights, Cain never really had the support of major gun rights lobbies, because the seriousness of Cain's support of Second Amendment rights was questionable at best. This put him in stark contrast to candidates like Rick Perry, whose gun rights record is ironclad; Newt Gingrich, Gary Johnson, and Jon Huntsman, whose public statements and actions in office supported a 'favorable' impression of gun rights; Rick Santorum, a life member of the National Rifle Association; and Ron Paul, who has donated large sums of money to gun rights legal actions. In fact, only one other candidates' gun rights record is murkier than Cain's: Mitt Romney.

Little needs to be said on Cain's foreign policy flubs, since they are well-known and often-repeated. Cain's numerous foreign policy gaffes turned away 'defense hawks' and foreign policy analyists, who want a better-informed Commander-in-chief.

Cain's 999 tax plan became something of a gimmick, due to Cain's laughable overuse of the phrase. It was so laughable, in fact, that a number of Twitter personnas (of which I am one) instituted a "999 drinking game" during debates. The fact that the details of the 999 plan were abysmally ill-conceived helped to cement the failure of Cain's de facto talking point.

And then there was Cain's comments on the housing bubble- his failure to predict the consequences of a bad policy of giving away mortgages to unqualified borrowers, and the insults he hurled at those of us who did forsee the housing collapse. (I have also blogged about Newt Gingrich's record on this same issue.) Of anyone on the right, Tom Woods has compiled the best case against Herman Cain as a free-marketer.

Cain also failed to earn the respect of monetary reformers, due to his background as a former Federal Reserve chairman and his opposition to auditing the Fed.

So if Herman Cain had no unique support from educated fiscal conservatives and tax policy enthusiasts, defense hawks, gun rights advocates, foreign policy wonks, or monetary reformers, where did his support come from?

The answer is damning: It came from people who believed he had greater character than anyone else in the race. Cain himself played up this element with cozy stories about his faith, his battle with cancer, his long marriage, his fortitude in the face of racial discrimination in the South, his hard work and success in business, and so forth. I myself commented that, though I didn't support him for President, I would probably like him very much if I knew him privately; this personability is what drove his fans- the "Cainiacs"- to support him so ardently (and at times, ridiculously).

And then came the allegations. The first few were laughable in their transparency, and Cain dismissed them and promised us he had "no skeletons in his closet"; Sharon Bialek's claim was quickly dissected and dismissed; but then came Ginger White, with a claim of a 13-year affair with Cain, and evidence in the form of late-night cell phone calls and text messages.

The crushing blow, then, is not that yet another political personality engaged in sexual misconduct- we all know that this is as common in politics as neckties- but that Cain doesn't have the great personal integrity he claimed to have.

And that is the worst kind of betrayal any of us can suffer.

Rejecting FairTax Part One: Why Not Tax Consumption?

In Part One, I'll cover the dangers of taxing consumption as a major source of government revenue, both to the individual and to the economy.

Part Two will cover the little-known problems in the FairTax proposal- the "fine print" FairTax advocates won't tell you about (or don't know themselves); I'll also refute some of the inconsistencies and rhetoric used by FairTax advocates.

Part Three will introduce the reader to the benefits of flat income taxation- why it's superior to consumption tax, and the economic benefits of flattening the tax code.

Part Four will introduce the reader to the Negative Income Tax Credit- an ideal solution to the the problems of our massive welfare state, which can only be implemented in conjunction with an income tax system.

Part One: Why Not Tax Consumption?

I think it's safe to say that nobody is happy with our current tax code. It burdens people who want to succeed in business, it favors the largest businesses who can afford to lobby for carve-outs; the enormity of the tax code creates a substantial compliance burden for smaller businesses; and- as already known to those of us on the small-government side of the aisle- 47% of the public pay no income tax at all, while recieving benefits funded by the other 53% who pay.

In our fervor to change the tax code, however, some people have been seduced by the idea of scrapping the tax code entirely: Eliminate income taxation and convert to a national tax on consumption. Whatever problems we currently have, I contend that this conversion would make our tax situation far worse.

Let's start with defining "consumption", because even this term creates problems. "Consumption" means the purchase of any good or service.

In a "pure", or "flat", consumption tax system, all transactions are taxed. Stated another way, every bill you recieve- your phone bill, your car insurance bill, your cable bill, your garbage removal bill, etc.- would include a consumption tax. Your grocery, fuel, medication, and clothing purchases would include a consumption tax. When you make a major purchase- such as a home or a car- the purchase price would include a consumption tax. If your washing machine or central air conditioning breaks down, the cost of parts and the bill for labor from the appliance repair service would include a consumption tax. If you hire a home health aide, consult an attorney, or visit a doctor, the bill for their services would include a consumption tax. If you own a business, all of the purchases made for your business- "business expenses"- would be subject to consumption tax. Making a deposit at the bank would include consumption tax, since the banking institution is offering a service by accepting your money.

Financial services- such as credit cards or bank loans to purchase a home or a car- would be taxed twice: Consumption tax on the goods purchased, and consumption tax on the service of financing.

Such a "pure" consumption tax would be wholly offensive to the public. Because of this, the major consumption tax schemes seen around the world today are designed to mitigate the impact of taxation on certain purchases. European-style value added tax, or VAT, is a system designed minimize the impact on businesses by allowing companies to recoup taxes paid on supplies. Most state sales taxes in the United States exempt some (but never all) purchases of food and medications. Variable rates are used in some countries to change the tax burden on various products: For example, levying a lower rate on medical devices than on clothing purchases. Certain transactions are exempted from taxation.

This illustrates the fallacy of a basic assumption about consumption taxes: That a consumption tax code would be simpler than an income tax code. As you can see above, there is just as much incentive to over-complicate a consumption tax code as with an income tax code. Most carve-outs found in the federal income tax code are also intended to mitigate the effects of taxing incomes.

It also illustrates a basic problem with consumption tax systems: They are regressive, in that the lower a person's income, the greater the share of their income is spent on consumption. A tax code can't predict whether a loaf of bread will be purchased by a well-to-do person, or a homeless person who has panhandled all day to buy it. Fair Tax proponents propose a "poverty grant", or "prebate", to alleviate this problem. I will discuss that in Part Two.

This brings us to the "47%"- the 47% of the public who currently pay no federal income tax. It's easy to think of this 47% as "freeloaders"- and while some of them are, others are clearly not. Many of this group are people whose incomes are currently tax-privileged for good reason: They are Social Security recipients, combat veterans, disabled people, and others whom society has determined should not be burdened with taxation. Also in this group are people who live on already-accumulated (and already-taxed) wealth: Persons living on accumulated retirement savings, for example. They have already paid their "fair share", and imposing consumption tax on would amount to double-taxing them.

As for the "freeloaders"- this group are problematic because they are net recipients of tax money. They pay less in taxes than they recieve in taxpayer-funded public assistance.

Imposing consumption tax on the "47%" would target precisely the wrong people: It would impose taxation on people we don't want to burden- such as retirees, veterans, and the disabled- while welfare recipients would continue to be net recipients of tax money. In other words, a consumption tax wouldn't fix the problem, it would simply add another problem. I will address the problems with our welfare system, and the overlooked solution to most of them, in Part Four.

High consumption taxes also have an effect on behavior: They provide incentive to develop a black market for untaxed goods. Consider a similar black market which already exists here in the United States: the market on tax-free cigarettes sold through Native American reservations, and one can readily see how a tax-free market on other goods could emerge and prosper quickly. And by the way: If the thought of "black market food" doesn't immediately make you think of a communist country, then I hereby revoke your "Small Government Conservative" card.

Consumptions taxes disproportionately burden businesses, too.

As stated above, in a "flat" consumption tax model, all purchases of goods and services are taxed, including purchases made by businesses; and as already known, any tax on business purchases constitutes the mother-of-all-barriers to growing a business.

With an income tax, it's relatively easy (though time-consuming) to deduct revenues spent on business expenses from taxation. With a consumption tax, this is decidedly more difficult, since tax is paid at the point-of-sale.

In countries with a VAT, for instance, businesses may recoup, from the government, the amount of taxes paid on expenses at the end of each year; however, the records-keeping burden of doing so is enormous, even more so than the records-keeping burden of our income tax system, because the purchasing business' records must match perfectly with the selling business' records.

This system also creates additional work- and additional expense- for government tax agencies: Every business in the country submits a request for reimbursement of taxes paid, every year, which means governments must compare the tax forms submitted by 'Business A' against the tax forms of every other business 'Business A' has purchased from that year.

It's no surprise, then, that some countries- Costa Rica, for example- choose to only allow certain expenses to be deducted, in order to minimize this burden of examination. In choosing to limit the types of expenses eligible for deduction, the government makes a conscious decision to tax certain business expenses- which brings us full-circle to the mother-of-all-barriers to business growth mentioned above.

The net effect of this: large businesses are favored, while small businesses remain small. The larger a business, the more easily said business may cope with the intense regulatory burden of records-keeping, or absorb the cost of taxes paid on business purchases. In fact, consumption taxes disproportionately favor vertically-integrated businesses- those companies large enough to own their suppliers- since greater integration means all records-keeping (or all business purchasing) is internal.

Stated another way: Consumption tax schemes are the cronyists' best friend, since consumption taxes favor already-large businesses and stifle potential competitors by preventing them from growing. (Note: I refuse to dignify the term "crony capitalism", since it isn't capitalism at all.)

This being the case, wealth remains generational, and the American dream of working hard, taking risks, and succeeding- and accumulating wealth in the process- becomes impossible. Consider this point: The class warfare rhetoric of socialists- "rich people stay rich, poor people stay poor"- becomes fact when a widespread consumption tax is instituted. This goes part-way to explaining how European nations (early adopters of consumption tax) accepted and embraced socialism at a faster pace than it was accepted here in the United States.

In sum: Consumption taxes as a major source of government revenue keep poor people poor, inhibit growth of small businesses, favor large businesses and ensure that wealth remains generational. Consumption tax schemes cause economies to become stagnant by stifling competition, and promote conditions which breed socialist sympathy and criminality.

If you, the reader, would like to refute these assertions, all you need to do is show me an example of a country which has had a major (i.e., a rate substantially greater than state sales taxes here) consumption tax for more than ten years, where none of these events have taken place. I can confidently issue this challenge, because I know there isn't such a place.

Monday, November 28, 2011

SCOTUS Declines To Hear CCW Case

The U.S. Supreme Court declined to hear the Masciandaro v. United States today.

Amid all the speculation about why SCOTUS would refuse the case- suggestions that they don't want to take on concealed carry rights, for instance- I believe there's a more-probable, but less-obvious reason: I think SCOTUS doesn't want to overcomplicate the Obamacare case.

Let me explain: Obamacare will basically be an argument about states' rights- the states' right to resist a federal intrusion into the health care industry. This being the case, I believe SCOTUS decided to avoid taking on concealed carry because the "states' rights" arguments regarding the Second Amendment are exactly opposite those of Obamacare.

Stated another way:

If SCOTUS decided in Masciandaro that states are limited in their authority to regulate concealed carry, but then decide in Obamacare that states have authority to resist intrusive federal acts, then the message from the court would appear to be very consistent with the Tenth Amendment- a limitation on federal intrusion on the states, and a limit on state intrusion on the people;

If SCOTUS decided that states had sweeping authority to resist both the federal government's actions and to regulate individual behavior, SCOTUS would be effectively transferring a tremendous amount of power to the states- something it really hasn't done in recent memory;

If SCOTUS decided that states had no authority to resist the federal government, and little authority to regulate individual behavior, then SCOTUS would effectively be stripping the states of a great deal of authority, and make the nature of the government relationship one between the federal government and the public, with the states being mere subdivisions;

If SCOTUS decided in favor of Obamacare and in favor of states regulating concealed carry, the court would be depriving the public of a substantial amount of individual autonomy, deciding that governments- either state or federal- could define and regulate the exercise of individual rights.

Knowing that nobody can accurately predict how Obamacare will be decided- I doubt even the Justices themselves can say for sure- I think the Supreme Court is attempting to avoid "doubling-down" on a message inconsistent with its real intent- whatever that intent may be.

By itself, Obamacare is an incendiary issue. Add gun rights to it and it becomes politically explosive.

Sunday, November 27, 2011

"Small Business Saturday", Please Don't Become "Buy Local"!

So, yesterday was "Small Business Saturday", an event intended to encourage all of us to inject cash into small businesses. I like this idea, and I like small business. I like the idea of a person taking a risk, striking out on their own, and striving toward independent succcess (and hopefully, independent wealth).

Alas, I can't help but draw comparisons to another small-business-oriented movement: The "Buy Local" movement.

Embedded within "Buy Local" drives and other attempts to balkanize the economy, is the very core concept of Marxism: The theory of the zero-sum economy, wherein a person who accumulates wealth can only do so through depriving another person of it- so, "buy local" to deprive "big business" of their "ill-gotten" profits.

Those who seek to continually reduce the size of your "economic zone" never stop with "local", either. Once such people have convinced you to cut back from "Buying American" to "Buying (your state)" to "Buying (your city)", their momentum carries them into absurd- but damaging- gossip territory: "Buy from Local Business A instead of Local Business B, because (insert reason)". The reason could be any petty issue: Business A is owned by a "good family", where Business B has a family member with legal troubles; Business A's owner lives in this town, where Business B's owner lives in the next town over; Business A is "struggling" and "needs" the money, where Business B's owner just bought a new boat. The exact reason is irrelevant. When dealing with people who seek to dictate how others spend their money, any convenient justification will suffice.

It also promotes inefficiency in business: It promotes the idea that a small, local business- regardless of how irrelevant or inefficient it is- is more "deserving" of my money than a large business which must constantly work to make itself more competitive and more efficient.

This mentality also puts franchises in an awkward position: I can't begin to tell you how many times I've seen restaurants open in my city, only to go out of business within a few months. Of course, the public blames "the big guys" for "taking money from them"- "the big guys" being fast-food eateries. Nevermind that "the big guys" are franchises- in other words, locally-owned just like the "little guy"- and never mind that they were here first, or that they're efficiently-run and offer products people want. They're "evil" and they "steal from the little guys"- proved by the fact that they have TV commercials.

And then there are Farmer's Markets, and the ridiculous assertion that they "save the environment", and that somehow "locally-grown" produce is superior, or not "full of pesticides"- as if New York lettuce is safe, but Pennsylvania lettuce will kill me- and to "save myself" (and the children, naturally), I'm expected to substitute my 20-minute trip to the grocery store for a three-hour ordeal involving overpriced lemonade, a horrible band (a local band, of course, rather than one I'd actually want to hear), no parking, and like any other local event, dog poop on the sidewalks.

Oh, and let's not forget the common conceit that events such as this "bring money into the city"- forgetting that the miniscule amount of tax revenue the city will receive, is completely dwarfed by the cost of overtime for the several police officers present (because it's not safe to sell cucumbers in a city of 17,000 people these days).

So, "Small Business Saturday": Please, Please, Please don't degenerate into the socialist failure that is "Buy Local". Otherwise, I'll be forced to do to you what I do to "Farmer's Market Thursday", and avoid you like the plague.

Saturday, November 26, 2011

Newt Gingrich's Record

I'm going to say something uncomfortable to many of you, but it has to be said:

Newt Gingrich has a history of flip-flopping on issues which rivals that of Mitt Romney.

There, I said it. I'm not the only one to say it, either.

Let's look at Gingrich's record:

On global warming: He supported government sponsoring of alternative energy programs (Solyndra, anyone?). He supported cap-and-trade. He supported ethanol subsidies. "Green" was fad, people were spellbound by it, and Newt being the clever politician he is, he got behind it, too.

And then there's Fannie Mae and Freddie Mac. When asked about his lobbying efforts on their behalf, he lied. He claimed he never lobbied for them. When proof of payment from them to him was made public, he claimed he worked for them as an historian. Do people seriously believe this? A financial institution hires an historian about as often as the Marine Corps hires an interior decorator.

And then there's the substance of the "historical analysis" he allegedly gave them (from the National Review link two paragraphs below):

It wasn’t obvious until 2007… Initially, it wasn’t Fannie Mae and Freddie Mac. Initially, it was things like Countrywide, but the minute you started getting people who could buy houses with no credit, no money down, I mean, these things are insane. And I was cheerfully saying that in my public speeches.

Gingrich contradicts himself here: It certainly was obvious, long before 2007, that a policy of government guarantee of loans without proof of the borrower's ability to repay was a bad idea (and defies basic common sense). The existence of this program was well-known within government circles and by "policy wonks" (such as your truly), but largely ignored by the media and the public at large. I have also criticized Herman Cain for the same failure of common sense in this regard.

On government-run medicine, Gingrich's record rivals that of many prominent Democrats. He was an early champion of the individual mandate, more than a decade before Romneycare. He now excuses himself from the criticism Romney recieves, claiming that his endorsement of an individual mandate was an effort "to block Hillarycare". Let's state this another way: Gingrich's response to a massive government healthcare initiative was to offer a slightly less-massive initiative of his own.

Gingrich was also one of the minds behind Medicare Part D. Newt again excuses himself from criticism for this multi-trillion-dollar giveaway, claiming that it helped reduce the cost of government-provided health care by subsidizing medicines in lieu of more-expensive surgeries, ignoring one of the basic principles of government interference in the market: Subsidizing a product makes it more expensive in the long-run. If the government gives people a dollar to buy an apple, the cost of an apple goes up by a dollar.

Gingrich, in keeping with his long-standing record of favoring greater government intervention in the health care industry, described Paul Ryan's proposal to convert Medicare into a premium support plan as "right-wing social engineering". Of course, Gingrich changed his tune when he caught flak for saying this, and has spent the last six months crafting an "alternative history" of his 17+ year record of supporting socialized medicine.

Jacob Sullum from Reason made an excellent point on this topic: Gingrich's rhetoric actually endangers real reforms while giving the public a painless-sounding but totally ineffective placebo of "cutting waste, fraud and abuse"- a rhetoric he (along with numerous Democrats) also applies to other areas of government spending by advocating 'modernization', rather than actual cutbacks, as his primary concept for controlling the cost of big-government programs, as if new computers will make big government acceptable.

In sum: I'm frankly disturbed by the recent fascination with Gingrich and the amnesia regarding his record. Somehow, conservatives have developed a belief that intellectualism and con artistry are mutually exclusive. Voters have been lulled by the superficially-impressive nature of his speeches.

This means the Tea Party effort to push out slick salesmen in favor of principled, fiscally-minded, small-government representatives is failing. And "slick salesman" is an apt description of Gingrich's career: People wanted free medication for Grandma and Grandpa, and Newt delivered. People wanted a house they couldn't afford, and Newt delivered. Gingrich will give the public whatever they want, and sound convincingly principled while doing it. The fact that Newt also participated in welfare reform and budget balancing isn't a demonstration of his bona fides, it's merely another thing the public asked for and got (for a brief period).

The notion that Gingrich is the ideal "not-Romney" candidate is wholly misguided: Newt Gingrich is Mitt Romney without running shoes.

Friday, November 25, 2011

SAAB: Symptom Of A Welfare Culture

SAAB Automobile AB announced today that, for the sixth month in a row, they can't meet payroll.

The backstory for this American audience: Saab first announced difficulties paying its employees in April. The employees (better-known in socialist speak as "workers") ceased working, and have been collecting government unemployment benefits equal to their full salaries ever since.

Saab's financial difficulties began in the late 1988, when the company reported a loss for the year. The company failed to turn a profit in 1989. In 1990, 51% of Saab's car division was sold to General Motors..

GM's mismanagement of Saab paralleled GM's mismanagement of itself: Saab made a substantial profit only one year of the 1990s- in 1995, with excellent European sales of a newly-redesigned Saab 900 launched the previous year. Despite mediocre sales, GM decided to acquire the remaining Saab shares in 2000.

From 2000 to current, Saab has only made a profit in one year: 2001.

Saab's underperformance worsened in recent years, trending with the rest of the world's economic downturn.

In 2009, Saab appealed to Swedish courts to be separated from General Motors ownership. Among the issues cited: GM had, for years, been reporting Saab-brand sales as GM-brand sales. This effort failed, but Saab was eventually sold to Spyker Automotive in 2010. Among the condition of the sale were loan guarantees from the Swedish government to Saab. The Swedish government stated that Saab was too important to Sweden's economy to fail.

The Swedish government itself is partly to blame for Saab's financial troubles: under Swedish law, once an employer hires an employee, the employer must continually employ that person until the employee resigns, commits misconduct, or the company declares bankruptcy. Layoffs for 'just cause' due to insolvency require government approval and mandatory negotiation with the employees' union representation. In other words, layoffs are illegal in Sweden unless approved by the employees' union and the government.

Another government issue for Saab: The burden of payroll taxes imposed on employers. Saab reportedly owes employees $5.5 million in salary for the month of November, and owes the Swedish government approximately $10-15 million- two to three times its payroll- in payroll taxes and 'social fees' to the Swedish government for the same period.

So let's review: Saab has been a money-loss for more than two decades, but because it's "too big to fail", it's been propped up with government loan guarantees and subsidies. Government regulations and government taxes and fees- used to fund the Swedish government's social programs- have been crushing the profitability of this company. And collusion between the Swedish government and labor unions have prevented Saab from taking reasonable steps to manage expenses.

Sound familiar, anyone?

Lessons Learned From LEOSA

The National Right-To-Carry Reciprocity Act of 2011 passed in the House of Representatives last week. Although it's safe to say the bill won't pass through the Democrat-controlled Senate or be signed by President Obama, the bill is good law and, if all goes well for Republicans next year, the GOP will certainly make another attempt to pass it after January 2013.

I was one of those people who applauded the Law Enforcement Officer Safety Act of 2004- the national reciprocity act for active, retired, and disabled police officers- because I believed it would eventually create momentum for a national CCW reciprocity law. Some of my fellows believed LEOSA would be a giveaway for cops, and national concealed carry for "the rest of us" would never happen.

However, seven years of national experience with LEOSA have revealed some problems with the language of that law- language which I'm thankful hasn't been replicated in the NRTC Act.

The biggest concern was carry rules. I'm glad House Republicans didn't attempt to create a set of federal carry rules for interstate concealed carry, as were created for interstate peace officer carry. LEOSA's intent was to relieve peace officers from the need to memorize 50 states' distinct and often-contradictory regulations on when and where an individual may carry weapons. As expected with any federal compromise measure, the interstate carry regulations are less-restrictive than some states' rules, and more restrictive than others, leading many retired police officers to keep (and pay for) both a LEOSA qualification and a state CCW permit, and often an out-of-state non-resident permit as well, in order to maximize the places and times where they may carry when they travel.

In other words, a provision offering a single set of carry rules- which was intended to alleviate compliance concerns- actually became an additional layer of expense for some retired police officers.

It also goes without saying that federal carry rules, if instituted for private persons, could (and probably would) be amended by future Congresses to create headaches for us.

NRTCRA's "clean bill" approach- granting simple reciprocity between states which issue carry licenses- eliminates this added layer of complexity. This means responsible gun owners will have some homework to do before traveling with a handgun- but then, this is nothing new to us.

There is a pitfall to this approach: Those of us who are actively involved with self-defense rights know the legal burden placed on 'packers' to comply with state and local laws. The concept of "substantial compliance"- the idea that a person's 'reasonable attempt' to comply with the law is satisfactory- is foreign to gun laws. We're already accustomed to "perfect compliance".

If NRTC eventually becomes law, I anticipate some problems with casual concealed carriers who unintentionally violate carry rules in another state. This is a message we will need to push to keep our compatriots out of trouble: The "close enough" principle which allows us to drive 32 miles per hour in a 30-mile-per-hour zone doesn't apply to firearms laws, especially in states like California and New Jersey, where law enforcement agencies already look for petty excuses to harass law-abiding gun owners.

Stated differently: If NRTC becomes law, this greater freedom will mean greater responsibility, both for gun owners and for those of us who educate them and advocate on their behalf. Luckily, this greater freedom/greater responsibility concept is also nothing new to us.

Also, please visit this link for my thoughts on the "states' rights" argument against national reciprocity.

Wednesday, November 23, 2011

PROTECT IP Act: One Ugly Piece Of Legislation

The proposed "Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act of 2011", or "PROTECT IP Act" (further shortened to "PIPA"), is about to be brought before the Senate for a vote. This bill, if passed, would grant the federal government greater powers to "combat online piracy".

Among these powers, it would allow the Department of Justice to obtain a court order to block access to websites based on a mere accusation of copyright infringement. I don't need to tell users of the internet how often 'minor' infringement of copyright (misuse of a photograph, for instance) occur on the 'net. Mistakes with no ill intent happen all the time.

Congress attempted this last year with the "Combating Online Infringements and Counterfeits Act" ("COICA"), and thankfully failed to pass it.

Stated another way: Congress, through this bill as well as the House's "Stop Online Privacy Act" ("SOPA"), want to give the same government which is hounding Gibson Guitar over an accusation of ill-gotten wood the authority to hound websites over misused photographs or video clips.

We on the right must especially resist this legislation. President Obama has already declared war on FOX News. He clearly intends to stifle critics in whatever way he can. Much of the success of the Tea Party movement has been attributable to online "new media" offering a counterpunch to established Pro-Obama media. Giving Obama and Eric Holder the ability to make a simple accusation of copyright infringement, get a court order, and shut down conservative new media sites (and potentially bankrupt the owners with legal bills) is unacceptable, especially in an election year!

Thankfully, Senator Ron Wyden (D-OR) (above) is leading a filibuster attempt over this bill. Any of us on the right, who mistrust government's motives, need to call and write our Senators and urge them to assist him.

A Better Way To Cut The Deficit

The Congressional Supercommittee has failed to come up with a deficit reduction plan. Personally, I'm thankful for that, since the very existence of the "supercommittee" was a Constitutional violation.

I won't get into a long explanation here of the debated cuts-which-weren't-actually-cuts, or the sequestration of funds, or the odd process by which the supercommittee would have presented a bill. It would be too much like explaining a Rube Goldberg invention.

Instead, I'll discuss the other budget proposal, the one which the supercommittee apparently never considered: Just stop spending!

Let me explain: According to the Congressional Budget Office, a "cut" includes any reduction in planned future spending, even if the total amount spent is greater than current spending. To use Neil Cavuto's analogy, it's similar to a diet where a person plans to gain 100 pounds in ten years, but instead only gains 50 pounds and calls it a "reduction". The "cuts" the supercommittee considered were "cuts" of this type.

The Tea Party proposal, which wasn't even considered by the supercommittee, would have frozen federal spending for ten years. That's it. Project the federal budget for 2021 at $3.8 trillion- the current amount.

By CBO's standard, this would have scored as a $9 trillion cut over ten years- and bring federal spending into virtual balance.

This proposal presents one challenge: Certain areas of federal spending will naturally increase over time- namely, Social Security (as new retirees begin collecting benefits), interest payments on the national debt, and "other federal mandatory spending" (the U.S. government's contractual obligations).

In order to offset these anticipated increases over the long term, actual cuts would be needed in other areas immediately. To give an idea of the shape of these cuts, here is a pie chart of federal spending from 2010 (the current proportions are very similar):

Something you'll notice right away: 80% of the federal budget is made up of just six expenses: Social Security, the Department of Defense, other federal mandatory spending, Medicare, Medicaid/SCHIP, and interest on the national debt. The other 20% is "everything else".

The Tea Party proposal didn't include specific cuts. Simply an agreement to freeze the budget would have been a huge victory. I'll take a little license here and make some "proposals" of my own to keep the budget amount at roughly $3.8 trillion for ten years.

1) Freezing the military budget isn't a bad thing. Admiral Mike Mullen offered a $100 billion reduction is DoD spending in 2010, which he said could be accomplished without making major changes to our military posture, defunding current operations, or defaulting on contractual obligations. I'll take Adm. Mullen at his word, and assume that these cuts could also be implemented in the form of reducing expenditures over time by freezing the military budget (and assuming that some of our current operations will end within the next ten years).

2) Offset growth in "other federal mandatory spending" by cutting in other areas. The "other federal mandatory spending" category is made up of the federal government's contractual obligations- military and civil service pensions, federal unemployment extension funds promised to the states, food stamp and HEAP funds, etc.

It goes without saying that there is substantial work to be done in reducing (and in some cases, eliminating) these expenditures- but this is work that can only be done over the long-term. Among these solutions would be transferring responsibility for food and heating assistance to the states, privatizing long-term unemployment insurance, converting future federal pensions into defined contribution programs, and the like. Naturally, some of the solution to these expenses is fixing our broken economy, which is far too long a subject for this post.

In the short term (i.e. over the next ten years), the amount of these expenses would have to be offset.

3) Paul Ryan is right- privatize Medicare (and block-grant Medicaid). Ryan's plan, which includes an $18,000 annual premium subsidy and, for low-income seniors, a cash account of up to $9,500 to offset out-of-pocket expenses, will reduce the projected cost increases of Medicare- but it will still increase in cost as more baby boomers enter retirement.

Offset these increases by cutting Medicaid funding by 20% or more, and block-granting the remaining funds to the states. Federal regulations add to the states' cost of supplying Medicaid, so cutting regulations offsets some of the reductions in funds. Let the states decide how to spend the rest of the money- for example, Mitch Daniels' highly-effective (and cost-reducing) "Healthy Indiana Plan".

Also: It strikes me as a total failure of the GOP message machine that the generous amounts proposed by Ryan- $18,000 in insurance premiums and $9,500 in a cash account- weren't being used to sell the idea. Imagine this conversation by pundits on TV:

Democrat Pundit: "Ryan's plan will kill Medicare, which is a great program!"
Republican Pundit: "Seniors would get up to $27,000 every year to buy insurance and pay out-of-pocket costs, and seniors get to choose their own insurance and keep their own doctor."

Argument killed.

4) Offset increases in interest payments by cutting departments. Since the budget won't balance overnight, the national debt would increase in the short-term. This means interest payments on the national debt would increase as well. In the long term, we'll need strategies for paying down the debt- sale of federal lands, for example- but in the short-term, we can offset the expected increase in interest payments by cutting federal agencies. This is where the "everything else" which makes up 20% of the total budget comes into play.

There are lots of opportunities here- eliminate the Departments of Education, Commerce, and uhh... (yes, I know, it's an old joke). Cut earmarks and foreign aid. You, the reader, undoubtedly know these talking points by now, so I won't waste your time repeating them.

5) The big one: Social Security. This is the area which will grow exponentially over the next ten to fifteen years, as the Baby Boom generation enters retirement. It's also a political minefield: Freezing social security payment amounts would mean political suicide for the GOP.

Again, there's a long-term fix for Social Security in the form of privatization. But, as with any long-term solution, there's a short-term problem to address as well.

What's needed here is a "bold plan" (please forgive the Herman Cain-ism), and Walter Williams has one: Offer an exchange of Social Security payments for a federal land grant. The federal government currently holds 29% of the landmass of the continental United States- nearly 650 million acres. Offering this land to those who will enter Social Security in 10-20 years, in exchange for their Social Security payments, could accomplish two things:

a) offset projected Social Security expenses;

b) create a demand for development in the states where this land is held- Wyoming, Montana, Utah, Nevada, etc.- for new home construction, road development, electrical, natural gas, and water supply systems, service-oriented businesses such as grocery stores and restaurants, and the like.

I think this is a terrific idea, and merits much more attention than it currently recieves.

In sum: It's easy to overcome the budget hyperbole from both sides of the aisle and see a solution to our budget problems. All you need is a calculator, a pie chart, and Occam's razor.

Monday, November 21, 2011

It's Settled: Cain Is No Friend Of Gun Owners

I have been arguing for some time that Herman Cain is no friend of gun owners.

At this Saturday's Thanksgiving Family Forum, Cain made some comments on the nature of government authority and individual rights which, I believe, cement my arguments about his stance on gun rights.

Frank Luntz asks Cain to clarify his bizarre Tenth Amendment stance. Watch Cain stumble through his definition of the word "wrong" (these videos are pre-set to play at the correct time):

So, a federal mandate to overturn segregation was acceptable because segregation was "wrong" (and I agree, it absolutely was). But a federal mandate to remove barriers to gun ownership doesn't meet Cain's "wrongness" test?

Now watch Cain explain his definition of equal treatment:

Cain believes that an acceptable use of federal authority is to ensure "the common good" and to "level the playing field" and promote "fairness and respect" (these terms make me cringe, as they are collectivist buzzwords, but that's beside the point). However, equal treatment of individual rights apparently doesn't include equal treatment of a person's right of self-defense, in Cain's opinion.

Now watch Cain describe the justification for using force:

He believes that a person has a right to use force in self-defense, which is terrific, but since (in Cain's opinion) a state may deny the individual the tools to engage in lawful self-defense, the right is rendered meaningless.

There are two possible ways to interpret Cain's conflicting messages:

1) Cain doesn't really understand the legal and political issues involved in gun ownership, and so he falls back on "states' rights" rhetoric; or,

2) Cain is lukewarm (at best) on private gun ownership.

This certainly wouldn't be the first time Cain has tried to use two diametrically-opposed sets of rhetoric (and failed miserably at it). He did so with his comments on abortion- trying to use both the "life begins at conception" and the "woman's choice" talking points.

However, Cain's stance on abortion was already well-known and crystal clear. He made the "woman's choice" remark once, and it was clearly a case of him trying to use incompatible rhetoric.

On gun rights, however, it hasn't been "just once". He's used the "states' rights" rhetoric multiple times, and he continues to stick to it.

Now watch this video: Cain is directly asked about his "states' rights" argument and gun rights:

Question: "Do you support states' rights to regulate firearms?"

Cain: "That's a loaded question."

Excuse me? It's a "loaded question" to ask for a definite yes-or-no?

So, let's review:

Herman Cain doesn't support National Right-To-Carry.

Herman Cain doesn't support "federal mandates" to ensure gun rights, because state gun laws are not "wrong".

Herman Cain supports allowing states to make whatever gun laws they choose.

Herman Cain uses tough rhetoric on gun ownership and self-defense, but resists answering detailed questions on gun ownership (reference the video above, the Wolf Blitzer interview, the New Hampshire question, etc.)

Herman Cain has been using the totally incorrect "states' rights" rhetoric for at least eight months now, and has had numerous opportunities to clarify his position on gun rights- but has not availed himself of any of these opportunities.

Ladies and Gentlemen, given these facts, it's time to put this one to bed: Herman Cain does not support your right to keep and bear arms in any meaningful way. He clearly enjoys his own right to do so (as he said in New Hampshire, "I have six (guns)... and that ain't enough"), and for those who provide his protection. But not yours or mine. In this regard, he's no better than Mitt Romney.

Wednesday, November 16, 2011

National Right-To-Carry: An Individual Right, Not A State Right

The U.S. House of Representatives voted on National Right To Carry today.

However, an unusual argument against gun rights has been presented by the small-government crowd, of which I consider myself a member. Ed Morrissey at Hot Air best describes this issue:

For permit holders like myself, the ability to travel with my pistol into other states without having to worry about reciprocity issues would be helpful indeed. But that doesn’t address other fundamental issues involved, such as the ability of states to set their own rules for permit issuance and carrying. Some states, like Minnesota, require a certain amount of training to get a permit, while others do not. Should Minnesotans be forced by the federal government to have non-residents carrying in the state under less-restrictive conditions than their own citizens have to address? For that matter, should Minnesotans have the right to carry in Illinois while the state forbids its own residents to do so, even apart from the question of whether Illinois’ policy is intelligent? (Let’s just stipulate that it’s idiotic, but also that Illinois voters don’t seem to be in a rush to correct it, either.)

To put this argument in context, I ask the reader to consider the following (intentionally absurd) "news story":

A debate is brewing in Congress over the National Right-To-Not-Be-Murdered (NRTNBM) Act. This act, if passed, will allow bearers of state-issued No-Murder permits to resist murder in other states.

But some small-government thinkers challenge the validity of a federal no-murder mandate.

"We must respect the right of states to determine who may lawfully resist murder" says Bob Walters of the State's Rights Institute. "There are legitimate public safety concerns here. If State A issues a No-Murder permit to anyone, but State B only issues No-Murder permits to persons who can prove a need to not be murdered, should State B be forced by the Federal government to recognize State A's lower standards? I respect the right of people to be murder-free, but states should be free to decide who may be murdered and who may not."

Rob Parker of the National Anti-Murder Association disagrees. "Every American has the right to not be murdered, whether they happen to be standing in New York City or in Tulsa, Oklahoma."

Legal analyst Bobby Jones gives us insights into the legal framework of the bill: "To date, the Federal courts haven't ruled that the 'Partial Faith & Credit' clause of the Constitution extends to the right to not be murdered. However, the Eleventeenth Amendment explicity states that the right to not be murdered 'shall be infringed in a manner prescribed by Congress', so the courts will likely rule that this law, if passed, would meet Constitutional muster."

48 of the 50 states have procedures for issuing no-murder permits. Vermont allows any person over age 16 to resist murder without a permit. Only Illinois requires that all residents submit to murder. If the NRTNBM Act passes, Illinois would not be required to recognize other states' no-murder permits.

Murderer-rights advocate Robert Brady strongly disagrees with the intent of the bill: "In a civilized society, only police and military should be murder-free. We're all safer when the government exercises a total monopoly on murder. Allowing just any common citizen to decide whether or not to be murdered will mean blood in the streets. Besides, studies say that a person with a no-murder permit is 347.9 times more likely to kill their own children than to resist murder, and I promise we didn't fund that study."

I use this farce to make a point: Each of us has an inalienable, natural right of self-defense. We have a right to go about our lives unmolested, and a right to use whatever means are necessary to assure that condition. We have a right to keep and bear arms for that purpose, which- despite the absolute phrase "shall not be infringed"- has been infringed upon to an intolerable degree by the federal government and by states and municipalities.

For those who mistakenly invoke "states' rights" and resist a "federal mandate" recognizing individual rights, let's take a trip back through history. At the end of the Civil War, southern states began writing laws to disarm newly-freed blacks (freed, incidentally, by a "federal mandate"). These states claimed a "states' right" to deny gun rights to blacks. The federal government created another "federal mandate"- the Fourteenth Amendment- to combat this tyranny. As Justice Clarence Thomas explained in the McDonald decision (incorporating the Second Amendment on the states), the Fourteenth Amendment was created specifically with the First and Second Amendments in mind, and it is historical and legal irony that the Second Amendment was among the last of the Bill of Rights amendments to be "incorporated".

Incidentally, I have twice criticized Herman Cain for holding to this absurd "states' rights" view (here and here).

Why were these "federal mandates" legitimate? Because one of the legitimate powers of our government is to guarantee and protect the rights of the individual. The fact that our government frequently fails to exercise this power, does not mean that it should be prevented from exercising it. Without the power to "mandate" the recognition of both natural and Constitutional rights, our country would cease to be the republic our Founding Fathers created, and would become a majority-ruled democracy, where individual rights are subject to popular will.

Let's also be clear about something else: Governments- including state governments- don't have rights! In our form of government, people have rights. Governments have powers, which are limited in scope.

Stated differently, we already have a series of "federal mandates" on the subject:

The Second Amendment, which provides that the right to keep and bear arms "shall not be infringed";

The Ninth Amendment, which extends protection to all rights (including the right to self-defense), not merely those rights enumerated in the Bill of Rights;

The Fourteenth Amendment, which imposes the Bill of Rights on the states;

The 'peaceable journey' provision of the Firearm Owners' Protection Act, signed by President Reagan in 1986, which requires states to allow persons to transport firearms during travel;

The 'Full Faith & Credit' clause of the Constitution, which requires states to recognize the comparable acts of other states.

In sum: If we assume the Second Amendment's "well-regulated militia" provision doesn't reference Congressional authority (Article I, Section 8) to train and discipline (in other words, to "regulate") the militia, but rather authorizes Congress to "regulate" individual behavior;

And if we assume the Ninth Amendment is an "inkblot" which doesn't actually guarantee the exercise of unspecified natural rights;

And if we assume that government, rather than our Creator, grants us our rights;

And if we assume that the right to "life, liberty, and the pursuit of happiness" is limited by the violent acts of others;

And if we assume that the Fourteenth Amendment was only intended to guarantee "certain" rights;

And if we assume the word "Full" in "Full Faith & Credit" is actually a synonym for the word "Partial";

And if we assume that states have "rights", rather than "powers", and among those "rights" is the right to decide who may exercise civil liberties and who may not;

And if we assume that our Founding Fathers didn't intend us to have "a republic, if you can keep it", but instead intended us to suffer the "tyranny of the majority" of a popular democracy, and intended for government to enforce popular whims rather than protect individual rights;

Then perhaps there is a valid argument against a "federal mandate" recognizing greater freedom of personal protection.

Or we can "mandate" that people learn how to read before interpreting the Constitution.

Saturday, November 12, 2011

Herman Cain: More Anti-Gun Than We Thought

I just recently discovered this video, from April 28th, of Herman Cain addressing a crowd in Rochester, New Hampshire, and opposing National Right-To-Carry:

From the video:

Question: What about a nationwide concealed weapons bill? Cain: Here's how I'd like that done: Let each state pass a concealed weapon bill. Empower the states- some states already have it- and not have a federal mandate. I believe in the Second Amendment.

As I stated in this post, Cain has used an argument matching that of Sonia Sotomayor regarding the applicability of the Second Amendment to the states:

Gun Control: Herman Cain's stated stance on gun control is bizarre- he seems to believe the federal government has only limited authority to regulate firearms, while the states may do so without restriction. Prior to Cain, I had only heard this position espoused by anti-gun judges (like Sonia Sotomayor)- people who favor very strict gun control but must appear to respect the Constitution. If we assume for a moment that this wasn't a "gotcha" question posed by Wolf Blitzer, and that this accurately reflects Cain's Second Amendment stance, then this is a problem.

This position also ignores an historical fact, cited by Justice Clarence Thomas in the US Supreme Court's McDonald decision (incorprating the Second Amendment on the states): The basic reasoning behind the Fourteenth Amendment was to incorporate the Second on the states. At the time of its passage, southern states were passing gun control laws intended to disarm newly-freed blacks. The fact that Cain- a southern black man who lived through segregation- misses this point, is deeply troubling to me.

If Herman Cain had only made the totally false "states' rights" argument once, it'd be forgivable as a slip-up. This is two statements, more than a month apart, both using extremely faulty Constitutional thinking.

As far as politicians claiming their individual status as gun owners as proof of their "pro-Second-Amendment" stance: I'll remind the reader that plenty of politicians who have voted for gun control laws were also privately gun owners. After all, Mitt Romney calls himself a "sportsman".

Clearly, Herman Cain has some explaining to do.

Friday, November 11, 2011

"Occupy" Violence: The Case For Deadly Force

The "Occupy" protests have turned deadly. Many people are shocked by this fact; I, however, am not. I believed, from the beginning, that this would be an inevitable product of the class warfare mentality behind the protests.

At the core of these protests is the erosion of property rights. The socialists encamped in our cities believe that individual property rights are "unfair" to those who have less property, and they seek to have government take property from its owners and redistribute it to others.

The link between a lack of respect for property rights and a lack of respect for the rights of the individual is well-known. Noted economist Walter Williams predicted this type of violence when he referenced this quote from John Adams:

"Property is surely a right of mankind as real as liberty." Adding, "The moment the idea is admitted into society that property is not as sacred as the laws of God, and that there is not a force of law and public justice to protect it, anarchy and tyranny commence."

Unfortunately, a large segment of our population doesn't grasp this connection.

This segment of the population, unaccustomed to violence, still maintain romantic notions of property crime. In their Mayberry-inspired worldview, burglars commit burglary because they are hungry, "things (property) can be replaced, but lives cannot", and "poor" shoplifters steal because they can't find work. This conduct, while illegal, can be excused because only those "down on their luck" would resort to such measures. These are the same snow-white souls who believe pornography and video games inspire violent thoughts and actions- they simply can't fathom how violent minds actually form.

In the real world, however, the situation is much more grave: Some people, such as the "Occupiers", harbor blind hatred for those who have more money and more property than themselves. These people have been taught to believe that any financially successful person obtained their wealth through criminal means; they have been raised to believe that no person advances through hard work (indeed, most of them have never had to perform "hard work"); they believe the criminal justice system exists solely to persecute them; and they believe savage, unmitigated violence is justified to redistribute property and "punish" the successful.

And "punish", they do: One need only see the sort of violence meted out during home invasion crimes (another form of class warfare): Raping and murdering adults and children, male and female alike; beating, torturing, disfiguring, and burning their victims alive; destroying property, homes, and businesses. These criminals believe that their victims- financially-stable nuclear families- have "stolen" from them, and believe themselves justified in inflicting a barbaric level of destruction and suffering as "punishment".

I have stated in other venues, and I will state here, that I strongly believe home invasion crimes will soon escalate in frequency and intensity, fueled by the class warfare furor of the "Occupy" protests. Both have the same basis: A hatred of those who "have more" than themselves. And both have degenerated to scarcely-believable levels of violence.

Those familiar with my self-defense activism know that I subscribe to the "personal autonomy" school of self-defense: The belief that each of us has a natural right to go about our lives unmolested, and to use any necessary means to ensure that condition. Far from justifying the debasement or punishment of others (as described above), this view of self-defense elevates and enhances the rights of the defender. This view encapsulates Oliver Wendell Holmes' view of rights: "Your right to swing your fist ends where my nose begins".

(I strongly encourage the reader to visit the link above.)

Today we are faced with a "movement" which numbers in the hundreds of thousands of particpants, who are destroying honest people's livelihoods and ability to feed their families, who are destroying our cities, who commit horrific acts of violence in broad daylight, and who have no apparent fear of police action (in part because politicians have restricted the ability of the police to combat them). The innocent person cannot hope to resist this violence with non-injurious means- and those who have attempted, have been even more brutally savaged.

This condition leaves only one tenable response: Recognition of the right of the individual to use any necessary means to combat this savagery- by which I mean, the employment of deadly force.

A few states- Texas being the prime example- already recognize a person's natural right to kill in defense of their property. In Texas, no person is mandated by the state to suffer the burglary or arson of their home or any other property. The age-old Castle Doctrine finds its greatest recognition in this state. Even the theft of property at night may be resisted with deadly force.

As a natural result, "Occupy Dallas" has been substantially less violent than other "Occupy" protests. In fact, "Occupy Dallas" has resorted to seeking a legal remedy to prevent their eviction. The lesson learned here: Recognizing the natural right of the innocent to defend their property with deadly force enhances, rather than erodes, the rule of law.

Unfortunately, most states grant little recognition of this right. In this regard, the state of Wisconsin is the worst offender, explicitly stating in its criminal code that self-defense is a privilege licensed by the state to the individual, not a right, and explicitly prohibiting the use of deadly force to protect property under any circumstances. One need only see the atrocious nature of the state capitol protests months ago to see the effect of this policy.

Adams' words are as correct today as they were two centuries ago. The erosion of any right cherished by the people will eventually lead to the erosion of all rights. We are seeing the cumulative effect of this erosion- Adams' "anarchy and tyranny"- today.

Sunday, November 6, 2011

Romney's 59 Point Plan: Good, Bad, And Ugly

So far I have covered Herman Cain's "999" Plan (Part One-Part Two), Rick Perry's Alternative Maximum Tax, and Steve Forbes' Flat Tax (which Perry was originally believed to be adopting); Now, it's Romney's turn to go under my tax microscope.

Romney's "59-point plan" (PDF) isn't just a tax code proposal, but a series of policy changes covering taxes, business regulations, foreign trade, energy policy, China policy, immigration, employment retraining, and the federal budget deficit. It is, by far, the lengthiest plan any of the current Presidential contenders has presented (and, undoubtedly, its length is the major reason it hasn't recieved as much media attention as the other plans).

One should notice very quickly that this isn't really a "new" plan; it's a compendium of proposals put forth by others, which Mitt has packaged together.

For the sake of brevity, I'll group together a number of points into single units, and rate each unit on a "Good-Bad-Ugly" scale.

Taxes:

1. Maintain current tax rates on personal income
2. Maintain current tax rates on interest, dividends, and capital gains
3. Eliminate taxes for taxpayers with AGI below $200,000 on interest, dividends, and capital gains
4. Eliminate the death tax
5. Pursue a conservative overhaul of the tax system over the long term that includes lower, flatter rates on a broader base
6. Reduce corporate income tax rate to 25 percent
7. Pursue transition from “worldwide” to “territorial” system for corporate taxation

This set of points reflects Romney's political pragmatism: He won't challenge Democrats on lowering tax rates for individuals, and will preserve current tax rates on investments for those who earn more than $200,000 (or, as President Obama calls them, "millionaires and billionaires"), while going for the low-hanging fruit of permanently eliminating the estate tax and taxes on investments for those earning less than $200,000 (in other words, tax-privileging senior citizens' accumulated wealth and retirement savings).

Being a flat tax advocate, I'm slightly disconcerted to see a low priority placed on instituting flat tax. As I stated in a previous post, there is already broad bipartisan support for flat tax; it's a major improvement which could be achieved quickly.

Likewise, proposing to merely reduce the corporate income tax to 25%, instead of eliminating it altogether, is another pragmatic move- Democrats would strenuously resist eliminating the corporate income tax, despite the fact that it is a double-tax.

The last point- "territorial taxation"- refers to a plan to permanently repatriate overseas profits. On the Republican side of the aisle, this is non-controversial; some Democrats could possibly be convinced to see the wisdom of re-injecting repatriated funds into the US. I like the idea of phrasing it as "territorial taxation"- this means a permanent change to the taxation of foreign profits, rather than a "holiday" for repatriation.

All in all, I'd have to describe this as "Good" on the Good-Bad-Ugly scale.

Regulations:

8. Repeal Obamacare
9. Repeal Dodd-Frank and replace with streamlined, modern regulatory framework
10. Amend Sarbanes-Oxley to relieve mid-size companies from onerous requirements
11. Ensure that environmental laws properly account for cost in regulatory process
12. Provide multi-year lead times before companies must come into compliance with onerous new environmental regulations
13. Initiate review and elimination of all Obama-era regulations that unduly burden the economy
14. Impose a regulatory cap of zero dollars on all federal agencies
15. Require congressional approval of all new “major” regulations
16. Reform legal liability system to prevent spurious litigation

I doubt I need to say anything on the subject of repealing Obamacare- it's a subject which has been covered in wonderful detail. I'll also avoid the "Obamneycare" quips at this point (side note: I still maintain that Tim Pawlenty started using the term "Obamneycare" after I made that joke on Twitter).

Repealing Dodd-Frank and amending Sarbanes-Oxley are unequivocally positive steps.

The part about this section which disturbs me is the repeated use of the "cost" phrasing- "unduly burden the economy", "cap of zero dollars", etc. This implies that there are regulations which cost nothing (I'd love to see an example of one); it also implies that regulating free enterprises is justifiable if the cost of said regulations is nil- again assuming that any regulation carries no cost.

It also produces another misnomer: That there is an accurate way to measure the costs to a particular business of a given regulation. All free-marketers understand that regulations cost money, and we can produce reasonable estimates to demonstrate this principle. It is, however, a principle; promising to implement it as a policy, which requires reliable calculations, could become a minefield.

Consider this: Whose calculations would be considered valid...? The above-mentioned Obamacare debate has centered upon conflicting calculations of cost- one agency claims Obamacare will save money, another group claims it will cost more money. We all know this tug-of-war by heart.

It's simpler and easier to just take a chainsaw to regulations. Additionally, the plan states that once Obama-era regulations are eliminated, the cutting will end- implying that no previous administration created burdensome regulations which could also be axed. Because of these factors, I have to rate this section "Bad".

Trade:

17. Implement agreements with Colombia, Panama, and South Korea
18. Reinstate the president’s Trade Promotion Authority
19. Complete negotiations for the Trans-Pacifc Partnership
20. Pursue new trade agreements with nations committed to free enterprise and open markets
21. Create the Reagan Economic Zone

There really isn't much to say in this section. Romney's plan literature (linked above) makes a very valid argument that President Obama has had little interest in developing foreign trade. While the free-marketer in me says the government should stay out of trade, another part of me says that using diplomatic means to strike deals beneficial to American businesses isn't a bad thing. On the whole, this is "Good".

China:

22. Increase CBP resources to prevent the illegal entry of goods into our market
23. Increase USTR resources to pursue and support litigation against unfair trade practices
24. Use unilateral and multilateral punitive measures to deter unfair Chinese practices
25. Designate China a currency manipulator and impose countervailing duties
26. Discontinue U.S. government procurement from China until China commits to GPA

It's no secret that China is doing very well economically- and some of that success is due to cheating.

On the first point: Romney proposes devoting additional Customs and Border Patrol personnel to searching incoming shipments of goods for counterfeit items. One can see right away how this could spiral into absurdity: CBP wants more resources to search ships coming from China, so Chinese counterfeiters ship to other countries, who then ship here. CBP then needs even more personnel to search ships from those countries. Chinese counterfeiters cease shipping to those countries and ship to other countries instead. CBP needs even more personnel to now search every ship from every country.

There is a basic rule of black market economics: A black market can only exist when a particular good or service is illegal, heavily taxed, or regulated. Here in New York, for example, there is a well-developed "black market" for cigarettes: We have such high taxes on cigarettes that people go to Native American reservations to buy tax-free smokes. Cutting the tax would kill this black market.

On the other hand, we know from the prohibition of alcohol that no amount of enforcement will kill a black market. In fact, stricter enforcement generally causes black markets to grow (the black market for recreational drugs, for instance).

The solution for the black market in Chinese-produced counterfeit goods, then, is to dramatically reduce the cost of doing business in the United States. Cut taxes, cut regulations, and enable businesses to sell their products cheaper, and there would be no profit in making counterfeits.

Add to this Romney's proposals in points number 24 through 26- which would take first steps toward an open trade war with China- and I have to call this section "Ugly".

EPA and Energy:

27. Establish fxed timetables for all resource development approvals
28. Create one-stop shop to streamline permitting process for approval of common activities
29. Implement fast-track procedures for companies with established safety records to conduct pre-approved activities in pre-approved areas
30. Amend Clean Air Act to exclude carbon dioxide from its purview
31. Expand NRC capabilities for approval of additional nuclear reactor designs
32. Streamline NRC processes to ensure that licensing decisions for reactors on or adjacent to approved sites, using approved designs, are complete within two years
33. Conduct comprehensive survey of America’s energy reserves
34. Open America’s energy reserves for development
35. Expand opportunities for U.S. resource developers to forge partnerships with neighboring countries
36. Support construction of pipelines to bring Canadian oil to the United States
37. Prevent overregulation of shale gas development and extraction
38. Concentrate alternative energy funding on basic research
39. Utilize long-term, apolitical funding mechanisms like ARPA-E for basic research

All of this is sound energy policy. The basic point made by these proposals is a well-known and sound one: The federal government is the single biggest roadblock to energy security and self-sufficiency. Federal over-regulation and manipulation limit oil and natural gas production; federal regulations limit the development of nuclear power (including the federal mandate which prohibits the building of newer, cleaner thorium-based nuclear reactors), and the federal government wastes taxpayer money on unproductive "green" energy programs. I rate this section "Good".

Labor:

40. Appoint to the NLRB experienced individuals with respect for the rule of law
41. Amend NLRA to explicitly protect the right of business owners to allocate their capital as they see fit
42. Amend NLRA to guarantee the secret ballot in every union certifcation election
43. Amend NLRA to guarantee that all pre-election campaigns last at least one month
44. Support states in pursuing Right-to-Work laws
45. Prohibit the use for political purposes of funds automatically deducted from worker paychecks
46. Reverse executive orders issued by President Obama that tilt the playing field toward organized labor

Again, nothing new, but all solid proposals. I can safely assume most people reading this blog are fully aware of NLRB's treatment of Boeing, and the use of union dues to almost exclusively support Democrat political campaigns. This solidly rates as "Good".

Retraining:

47. Eliminate redundancy in federal retraining programs by consolidating programs and funding streams, centering as much activity as possible in a single agency
48. Give states authority to manage retraining programs by block granting federal funds
49. Facilitate the creation of Personal Reemployment Accounts
50. Encourage greater private sector involvement in retraining programs

This section, in my opinion, makes a mountain out of a molehill: Government retraining programs put very few people back to work. They are a perfect example of a feel-good program- a waste of money which "feels" productive but really isn't.

To illustrate why, consider this hypothetical: You are an employer looking to hire a mechanic. You have two candidates, one with 10 years' experience as a mechanic, and another who just recently graduated from trade school and has never held a job as a mechanic. Which candidate do you hire? Obviously, you would hire the more experienced applicant.

This is a fatal flaw of retraining programs, which cannot be resolved by any amount of "restructuring". For this reason, I have to rate this section "Ugly".

Immigration:

51. Raise visa caps for highly skilled workers
52. Grant permanent residency to eligible graduates with advanced degrees in math, science, and engineering

While I'm all for increasing legal immigration, this proposal would target for immigration those people with advanced skills over all others. As I explained above, there is already a shortage of employment opportunities for skilled workers; the target of this proposal would just add to that problem. I have to call this section "Bad".

Federal spending:

53. Immediately cut non-security discretionary spending by 5 percent
54. Reform and restructure Medicaid as block grant to states
55. Align wages and benefts of government workers with market rates
56. Reduce federal workforce by 10 percent via attrition
57. Cap federal spending at 20 percent of GDP
58. Undertake fundamental restructuring of government programs and services
59. Pursue a Balanced Budget Amendment

A few points:

53) "Non-security discretionary spending" refers to about 15% of the total federal budget. A 5% cut of this tiny fraction amounts to practically nothing.

54) Block granting Medicaid funds to the states is a great idea- but not an original one. The key to making it work, though, is to block grant and cut the funds. Romney doesn't propose the "cut" part of that equation.

57) 20% of GDP is still higher than the 18%-ish typically collected by the federal government. It is, however, a cap, which is good; but Romney doesn't provide any clue as to what he'd cut to get below the cap.

58) This statement is so vague as to be worthless. Period.

59) This is a tricky subject, and I'm glad Romney left it for last. The basic concept of a balanced budget amendment- the idea of a Constitutional limit on spending- is a good theory. But as always, "The devil's in the details". Most proposals for a BBA have been written in such a way as to guarantee the involvement of the courts in the budgeting process, which could get very ugly. On the other hand, a very simple amendment- something to the effect of "Congress shall not spend more in the current year than the amount collected in revenue the previous year without a 2/3 majority of both houses"- is too blunt to pass through the Amendment process.

Given all of these issues, I have to rate this section "Bad".

So there you have it: Mitt Romney's 59-Point Plan: The Good, The Bad, and The Ugly.