It’s Monday, December 10th, 2012….but before we begin, a couple of quick personal notes concerning the handsome lads pictured below:

For those unfamiliar with our family, that’s our youngest son Travis, who turns 23 on Wednesday (for any Obama backers out there, like you, Travis is on the left), and our trusty guard dog Bam-Bam, who spent the majority of every day comfortably occupying the in-box on our desk.

Friday was a rough day in the McKee household; Bam-Bam (who we’ll dearly miss) died sometime early Friday morning, and Travis was laid off from his sales job later that afternoon.  But unlike Bam-Bam, whose premature passing was due solely to natural causes, Travis’ early exit was wholly the result of the economic policies of one man….

….and those ignorant enough….

….to have allowed him a second term.

Travis worked as the sales manager for a second-generation small business engaged in the sale of hot-glue products and application equipment.  The owner, who employs 9….uh,….make that 8 people, though “rich” by The Obamao’s standards, deemed his projected business insufficient to support a separate sales management slot, and saw nothing in the 2013 tax increases associated with Obamascare and the expiration of the Bush tax cuts to suggest circumstances might change. So he’ll go back to managing sales himself, perhaps limiting potential upside and growth, but definitely improving his current bottomline.

Travis is a very bright, personable young man with a gift for sales, and anyone out there in need of a young, enthusiastic salesman with enormous growth potential would do well to consider him; in fact, we’d consider it a personal favor!

In the meantime, he’s just another victim of Liberalism’s hopelessly misguided and wholly ineffective schemes for perpetual political power via the enforced redistribution of the fruits of others’ labor.

Now, here’s The Gouge!

First up, courtesy of NRO, Victor Davis Hanson offers his insight into the fairy-tale world of….

Obama’s Kingdom of Fairness

Forget the deficit. It is now the role of government to soak the undeserving rich.

 

We are still borrowing more than $1 trillion a year. Barack Obama has added more than $5 trillion to the national debt in his first term alone. Such massive borrowing is unsustainable. Someone somehow at some time has to pay it back.

Obama would agree. He once alleged that George W. Bush’s much smaller deficits were “irresponsible” and “unpatriotic.” Obama himself vowed to cut the budget deficit in half by the end of his first term. Instead, Obama’s annual deficits have never gone below $1 trillion.

Three ways to establish a long-term trajectory toward a balanced budget were under discussion. One was to adopt the proposals of the nonpartisan Simpson-Bowles Commission, appointed by Obama. The commission offered a balanced mix of tax reform and greater revenues, along with cuts in federal spending. But the president was not interested. The commission’s findings now seem stale just two years after they were issued.

Another way would have been to adopt the Bill Clinton–Newt Gingrich compromise formula of the 1990s that balanced the budget through a series of across-the-board tax hikes and spending cuts. But while the administration talked grandly of a return to higher “Clinton-era tax rates,” it never mentioned the necessary second half of the old equation — “Clinton-era spending cuts.” That balanced solution is dead, too.

Finally, we could have just enacted the income-tax rates of the Clinton era now and worked on the spending cuts later. But the administration did not wish to take that third approach either. Instead, it prefers returning to Clinton-era rates only for those who make more than $250,000 a year, while leaving the lower Bush-era income-tax rates — once soundly ridiculed — on all other Americans.

The problem is that such a soak-the-rich move would give the Treasury only about $80 billion a year in new revenue — about 7 to 8 percent of the money needed to make up for the massive annual borrowing. Even with proposed accompanying tax hikes on capital gains and larger estates, we still would fall hundreds of billions of dollars short. There simply are not enough affluent sheep who make more than $250,000 to shear.

Spending is the real problem, but it goes largely unaddressed. Obama’s first-term borrowing of $5 trillion was, in part, designed to stimulate the dormant economy while expanding entitlements to those suffering from the recession. But despite the addition of millions of Americans to those who already were receiving unemployment insurance, disability insurance, or food stamps, and despite massive loans to green industries, the unemployment rate and GDP growth are about where they were four years and $5 trillion ago.

Now the president wants another $50 billion in new borrowing. But why would borrowing another $50 billion jump-start the sluggish economy when 100 times that figure in deficit spending so far has not?

“Pay your fair share” was a winning Obama campaign theme — given that nearly half of all Americans do not pay any federal income tax and receive some sort of federal or state entitlement. Yet if the targeted 5 percent of American taxpayers already pay almost 60 percent of all federal-income-tax revenues, what would the president consider their proper “fair share” — 70 percent, 80 percent, 90 percent, or 100 percent?

We are now entering a rare, revolutionary period in American history. The present administration is not just reexamining the traditional physics of taxing and spending, but the very basis by which Americans are compensated in the workplace.

For Obama, it is inherently unfair that a few — a surgeon, a small-business woman, an investor, or a Lotto winner — should make so much. Thus it is the government’s obligation, along with state and local governments, to take much of it away from the suspect few and redistribute it to far more deserving others.

All the old criteria in a free-market economy that decide how much we are able to make — education levels, hard work, personal responsibility, particular tastes and values, skill sets, self-discipline, or even sheer luck, accidents, relative health, or inheritance — now matter far less.

Instead, Obama’s all-knowing, all-powerful federal government, through higher taxes, more spending, and greater deficits, will set right what the unfair marketplace has so skewed. At last, we learn what Obama really meant when, in unguarded moments, he sermonized about “redistributive change,” the need to “spread the wealth,” knowing the proper time not to profit, and “at a certain point” making too much money.

Do we need to heed any longer the ancient advice — scrimp to leave something behind for your kids; try to get a promotion; make sure your savings account is larger than what you owe — if some inequality results?

There is now only one commandment in the new Kingdom of Fairness: Make less than $250,000, and the government will ensure that you, the deserving, get your fair share; make more than that, and the government will demand that you, the undeserving, pay your fair share.

That is all ye need to know.

Less than $250,000….for now!  You know….we know it; over $250K is just the beginning.  Orwell had it right; in the end….

It’s as Ariel and Will Durant noted in today’s Money Quote:

“Out of every hundred new ideas ninety-nine or more will probably be inferior to the traditional responses which they propose to replace. No one man, however brilliant or well-informed, can come in one lifetime to such fullness of understanding as to safely judge and dismiss the customs or institutions of his society, for those are the wisdom of generations after centuries of experiment in the laboratory of history.“

Next up, Mark Steyn, writing at the Orange County Register, suggests that when it comes to taxes….

America not paying its fair share

 

Previously on “The Perils of Pauline”:

Last year, our plucky heroine, the wholesome apple-cheeked American republic, was trapped in an express elevator hurtling out of control toward the debt ceiling. Would she crash into it? Or would she make some miraculous escape?

Yes! At the very last minute of her white-knuckle thrill ride to her rendezvous with destiny, she was rescued by Congress’ decision to set up… a Super Committee! Those who can, do. Those who can’t, form a committee. Those who really can’t, form a Super Committee – and then put John Kerry on it for good measure. The bipartisan Super Committee of Super Friends was supposed to find $1.2 trillion of deficit reduction by last Thanksgiving, or plucky little America would wind up trussed like a turkey and carved up by “automatic sequestration.”

Sequestration sounds like castration, only more so: it would chop off everything in sight. It would be so savage in its dismemberment of poor helpless America that the Congressional Budget Office estimates that, over the course of a decade, the sequestration cuts would reduce the federal debt by $153 billion. Sorry, I meant to put on my Dr. Evil voice for that: ONE HUNDRED AND FIFTY THREE BILLION DOLLARS!!! Which is about what the United States government currently borrows every month. No sane person could willingly countenance brutally saving a month’s worth of debt over the course of a decade.

So now we have the latest cliffhanger: the Fiscal Cliff, below which lies a bottomless abyss of sequestration, tax-cut extension expiries, Alternative Minimum Tax adjustments, new Obamacare taxes, the expiry of the deferment of the Medicare Sustainable Growth Rate, as well as the expiry of the deferment of the implementation of the adjustment of the correction of the extension of the reduction to the proposed increase of the Alternative Minimum Growth Sustainability Reduction Rate. They don’t call it a yawning chasm for nothing.

As America hangs by its fingernails, wiggling its toesies over the vertiginous plummet to oblivion, what can save her now? An Even More Super Committee? A bipartisan agreement in which Republicans agree to cave, and Democrats agree not to laugh at them too much? That could be just the kind of farsighted reach-across-the-aisle compromise that rescues the nation until next week’s thrill-packed episode when America’s strapped into the driver’s seat of a runaway Chevy Volt careering round the hairpin bends on full charge, or trapped in an abandoned subdivision overrun by foreclosure zombies.

I suppose it’s possible to take this recurring melodrama seriously, but there’s no reason to. The problem facing the United States government is that it spends over a trillion dollars a year that it doesn’t have. If you want to make that number go away, you need either to reduce spending or increase revenue. With the best will in the world, you can’t interpret the election result as a spectacular victory for less spending. Indeed, if nothing else, the unfortunate events of Nov. 6 should have performed the useful task of disabusing us poor conservatives that America is any kind of “center-right nation.” A few months ago, I dined with a (pardon my English) French intellectual who, apropos Mitt Romney’s stump-speech warnings that we were on a one-way ticket to Continental-sized dependency, chortled to me, “Americans love Big Government as much as Europeans. The only difference is that Americans refuse to admit it.” (Only those who don’t have to pay for it!)

My Gallic charmer is on to something. According to the most recent (2009) OECD statistics: Government expenditures per person in France, $18,866.00; in the United States, $19,266.00. That’s adjusted for purchasing-power parity, and, yes, no comparison is perfect, but did you ever think the difference between America and the cheese-eating surrender monkeys would come down to quibbling over the fine print? In that sense, the federal debt might be better understood as an American Self-Delusion Index, measuring the ever-widening gap between the national mythology (a republic of limited government and self-reliant citizens) and the reality (a 21st century cradle-to-grave nanny state in which, as the Democrats’ Convention boasted, “government is the only thing we do together.”).

Generally speaking, functioning societies make good-faith efforts to raise what they spend, subject to fluctuations in economic fortune: Government spending in Australia is 33.1 percent of GDP, and tax revenues are 27.1 percent. Likewise, government spending in Norway is 46.4 percent, and revenues are 41 percent – a shortfall but in the ballpark. Government spending in the United States is 42.2 percent, but revenues are 24 percent – the widest spending/taxing gulf in any major economy.

So all the agonizing over our annual trillion-plus deficits overlooks the obvious solution: Given that we’re spending like Norwegians, why don’t we just pay Norwegian tax rates?

No danger of that. If (in Milton Himmelfarb’s famous formulation) Jews earn like Episcopalians but vote like Puerto Ricans, Americans are taxed like Puerto Ricans but vote like Scandinavians. We already have a more severely redistributive taxation system than Europe, in which the wealthiest 20 percent of Americans pay 70 percent of income tax while the poorest 20 percent shoulder just three-fifths of 1 percent. By comparison, the Norwegian tax burden is relatively equitably distributed. Yet Obama now wishes “the rich” to pay their “fair share” – presumably 80 percent or 90 percent. After all, as Warren Buffett pointed out in The New York Times this week, the Forbes 400 richest Americans have a combined wealth of $1.7 trillion. That sounds like a lot, and once upon a time it was. But today, if you confiscated every penny the Forbes 400 have, it would be enough to cover just over one year’s federal deficit. And after that you’re back to square one. It’s not that “the rich” aren’t paying their “fair share,” it’s that America isn’t. A majority of the electorate has voted itself a size of government it’s not willing to pay for.

A couple of years back, Andrew Biggs of the American Enterprise Institute calculated that, if Washington were to increase every single tax by 30 percent, it would be enough to balance the books – in 25 years. If you were to raise taxes by 50 percent, it would be enough to fund our entitlement liabilities – just our current ones, not our future liabilities, which would require further increases. This is the scale of course correction needed.

If you don’t want that, you need to cut spending – like Harry Reid’s been doing. “Now remember, we’ve already done more than a billion dollars’ worth of cuts,” he bragged the other day. “So we need to get some credit for that.”

Wow! A billion dollars’ worth of cuts! Washington borrows $188 million every hour. So, if Reid took over five hours to negotiate those “cuts,” it was a complete waste of time. So are most of the “plans.” In fact, any “debt reduction plan” that doesn’t address at least $1.3 trillion a year is, in fact, a debt-increase plan.

So, given that the ruling party will not permit spending cuts, what should Republicans do? If I were John Boehner, I’d say: “Clearly there’s no mandate for small government in the election results. So, if you milquetoast pantywaist sad-sack excuses for the sorriest bunch of so-called Americans who ever lived want to vote for Swede-sized statism, it’s time to pony up.”

OK, he might want to focus-group it first. But that fundamental dishonesty is the heart of the crisis. You cannot simultaneously enjoy American-sized taxes and European-sized government. One or the other has to go.

But, we’d predict, not until America experiences her own version of Grease….

….er,….Greece!

Meanwhile, as the WSJ details, certain members of The Gang That Still Can’t Shoot Straight lacking the courage of their supposed convictions seem hell-bent on creating….

The Republican Tax Panic

The GOP should negotiate with Obama, not each other.

 

If any Republicans thought that President Obama would respond with magnanimity in victory, they now know better. He is determined to rout them on taxes, give as a little as possible on spending, and blame them for any economic damage in the bargain. The question for the GOP is how to minimize the harm to the economy, as well as to their chances of a political and policy comeback in 2014 and beyond.

So it’s a shame that Republicans are playing into Mr. Obama’s hands, negotiating in public among themselves, prematurely giving up on the tax issue and undermining House Speaker John Boehner in the process. (Besides, Boehner’s repeatedly demonstrated he’s more than capable of undermining himself.) Mr. Obama isn’t going to blink on the budget if he thinks Republicans are going to blink first, and so far the emerging GOP position seems to be to surrender on taxes first and hope Mr. Obama will have mercy on them later on entitlements.

Tennessee Senator Bob Corker made the case for this strategic retreat on “Fox News Sunday,” arguing that if Republicans raise tax rates as Mr. Obama wants, “the focus then shifts to entitlements and maybe it puts us in a place where we actually can do something that really saves the nation.”

But what is the evidence in the last four years, or even since the election, that Mr. Obama won’t pocket that victory and then refuse to offer any but token changes on entitlements? Mr. Corker has proposed several specific and laudable entitlement changes, but note how Mr. Obama has declined to support a single one of them in public. After he has GOP fingerprints on tax rate increases, Mr. Obama is more likely to make Republicans trade onerous defense cuts for entitlement changes that are far less consequential than Mr. Corker has proposed.

There are also the economic merits to consider, if that doesn’t rudely intrude on all the political calculations. Republicans presumably campaigned against raising tax rates because they believed what they said about the costs to growth and small business. The economic evidence is overwhelming that they are right.

But now various Beltway sages want Republicans to say never mind, we were only kidding, tax rates don’t matter to the economy. So because Mitt Romney lost, Republicans in Congress are supposed to repudiate their core economic principles.

Mr. Obama says he merely wants tax rates to return to the “Clinton rates,” but rates are already scheduled to go higher than that thanks to ObamaCare. There’s the 0.9% Medicare surcharge on all income above $250,000, plus the 3.8% surcharge on investment income. The U.S. economy in 1993 also had far more growth momentum than it does today.

Bill Clinton agreed to cut the capital gains rate to 20% in 1997 but Mr. Obama wants it to be 23.8% at least. State tax rates are also higher than they were in the 1990s, especially in California, where the capital gains rate now is 13.3% on top of the federal rate. Combined that would be 37.1%. In Singapore, the capital gains tax is . . . zero.

Mr. Boehner’s offer to raise revenue by reducing loopholes and deductions is therefore the right policy direction and consistent with a pro-growth tax reform. If Mr. Obama were open to a tax reform that reduced rates in return for fewer deductions, Republicans would be right to make a down payment this year and negotiate a larger reform in 2013. That is why we have supported raising revenue by closing loopholes, which are exploited the most by the richest Americans.

The problem is that Mr. Obama has backtracked on reform. (In other words, he’s lied….yet again!) In 2011 he was saying he wanted $800 billion in more revenue, and that he and the GOP could get it from deductions. Now he says he wants higher rates and fewer deductions in order to raise $1.6 trillion in more revenue over 10 years. He may also believe it’s a concession to raise the top tax rate to 37% or 38% (from 35%) instead of the 39.6% Clinton rate as long as he also gets more revenue from capping deductions.

This latter choice would be the worst possible deal for the economy and for Republicans. Not only would they have agreed to raise rates, but they’d have given away the revenue from deductions that could be traded for lower rates. This wouldn’t be a step toward tax reform but a double-barreled tax increase. And it would make a genuine pro-growth tax reform all but impossible.

It’s certainly true that Republicans can’t stop a tax rate increase if Mr. Obama is determined to make it happen. The Bush-era rates automatically go up on January 1, and the House can’t extend them alone.

But Mr. Obama also can’t get what he wants without House Republicans. He needs their votes to extend current rates for lower-income taxpayers, as well as to prevent the Alternative Minimum Tax from hitting 27 million more taxpayers. Most of those new AMT taxpayers live in high-tax Democratic states. Meanwhile, the death tax rate reverts to 55% and a $1 million exemption. Senate Democrats running for re-election in 2014 won’t want that on their resume.

For all of his bluster about blaming Republicans, Mr. Obama also knows a budget failure would do enormous harm to his chances of second-term success. It would guarantee at least two more years of trench budget warfare and poison the chances of immigration or other reform. Another recession would be on his watch, not on George W. Bush’s.

The point is that Republicans have more leverage than they imagine, and they ought to act like it. A good start would be for the House to pass a bill this week extending all the tax rates for six months and fixing the defense spending cuts coming in January. Then ask Senate Democrats to pass their own bill, and they can negotiate with the President under regular Congressional order.

At the same time, Mr. Boehner could alert his new Members that he’ll convene the next House to pass the same bill again on January 3. The world doesn’t end on December 31 and the law can still be changed. Such resolve would show some leadership and demonstrate to Mr. Obama that Republicans are prepared to let the spending sequester begin to take place if he won’t negotiate over spending in good faith.

Mr. Boehner and Republicans can also make clear to the voters that if Mr. Obama doesn’t want to jump off the “fiscal cliff,” he can always instruct the IRS not to change the tax withholding tables pending further negotiations. And he can instruct his budget office to instruct the Pentagon to exercise flexibility in the way that it implements the automatic spending cuts.

Mr. Obama wants to give the appearance of a looming fiscal crisis because it serves his political interest in spooking Republicans to give him everything he wants. He’s pressing so hard for tax rate increases not because they will bring in much revenue but because he wants GOP tax cover for Democrats in 2014 and to get Republicans to concede that tax rates must rise. Once he pockets that, he’ll be back by more.

Republicans need not play along, and they and the country will suffer if they do. Above all, they need to start negotiating as a team with Mr. Obama and stop making premature concessions for the TV cameras that only make the White House less likely to meet them half way.

Particularly U.S. Senators like Corker, who don’t even have a seat at the negotiating table….as if the other guys would negotiate in good-faith to begin with.

And since we’re on the subject of bad-faith negotiations, have you heard about the latest Liberal ploy to bypass the House of Representative’s constitutional power of the purse?

Could two platinum coins solve the debt-ceiling crisis?

 

If President Obama wants to avoid an economic calamity next year, he could always show up at a press conference bearing two shiny platinum coins, worth… $1 trillion apiece.

Okay, that sounds utterly insane. But ever since last year, some economists and legal scholars have suggested that the “platinum coin option” is one way to defuse a crisis if Congress can’t or won’t lift the debt ceiling soon. At least in theory.

The U.S. government is, after all, facing a real problem. The Treasury Department will hit its $16.4 trillion borrowing limit by next February at the latest. Unless Congress reaches an agreement to raise that borrowing limit, the government will no longer be able to borrow enough money to pay all its bills. Last year, Republicans in Congress resisted lifting the debt ceiling until the last minute — and then only in exchange for spending cuts. Panic ensued. So what happens if there’s another showdown this year?

Enter the platinum coins. Thanks to an odd loophole in current law, the U.S. Treasury is technically allowed to mint as many coins made of platinum as it wants and can assign them whatever value it pleases. Under this scenario, the U.S. Mint would produce (say) a pair of trillion-dollar platinum coins. The president orders the coins to be deposited at the Federal Reserve. The Fed then moves this money into Treasury’s accounts. And just like that, Treasury suddenly has an extra $2 trillion to pay off its obligations for the next two years — without needing to issue new debt. The ceiling is no longer an issue.

“I like it,” says Joseph Gagnon of the Peterson Institute for International Economics. “There’s nothing that’s obviously economically problematic about it.” In theory, this is much like having the central bank print money. But, says Gagnon, the U.S. government would simply be using the money to keep spending at existing levels, so it wouldn’t create any extra inflation. And if it did cause problems, the Fed could always counteract the effects by winding down some of its other programs to inject money into the economy.

Is the platinum coin option really legal? Apparently so. It was discussed during the 2011 debt-ceiling crisis by Jack Balkin, a law professor at Yale Law School. Under law, he noted, there’s a limit to how much paper money the United States can circulate at any one time, and there are rules that limit how many gold, silver and copper coins the Treasury can mint.

But there’s no such limit when it comes to platinum coins. It’s right there in the U.S. legal code: “The Secretary may mint and issue platinum bullion coins and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time.”

Problem solved, right?

Well, maybe not. This strategy is hardly risk-free. Opponents could plausibly argue that the original law was intended to set rules around commemorative coins, not to finance the operations of the government. And, of course, the political blowback would be fierce.

“Plausibly”?  More like “posiTIVely”!

Speaking of deliberate misrepresentation of the facts, consider this headline from CNSNews.com which lends truth to the supposedly-rosy employment numbers:

73% of New Jobs Created in Last 5 Months Are in Government

 

On the Lighter Side….

And in the Automotive Section, yet another reason to avoid the union lable:

Chrysler workers canned for drinking on the job reinstated

 

Chrysler workers who were fired or suspended two years ago after a MyFoxDetroit investigation found them drinking and goofing off during lunch break are back on the job. MyFoxDetroit first aired the footage of the Chrysler workers in September 2010. Video showed them in a park during the work day, drinking alcohol from bottles covered in brown paper bags and smoking what appeared to be marijuana.

With the auto giant having recently received a federal taxpayer bailout, and President Obama having visited the plant where the employees worked just months earlier, Chrysler appeared to take a zero-tolerance attitude. The company fired 13 workers, and suspended two. But MyFoxDetroit reports that following a union-backed arbitration process, the employees were reinstated. This week, they came back to work.

Chrysler said in a statement that it does not support the decision to bring back the workers but would like to move on. “While the company does not agree with the ultimate decision of the arbitrator, we respect the grievance procedure process as outlined in the collective bargaining  agreement and our relationship with the (United Auto Workers union),” the company said, according to MyFoxDetroit. “Unfortunately, the company was put in a very difficult position because of the way the story was investigated and ultimately revealed to the public. These employees from Jefferson North have been off work for more than two years. The time has come to put this situation behind us and resume our focus on building quality products that will firmly establish Chrysler Group’s position in the marketplace.”

The employees work at the Jefferson North Assembly Plant, which builds Jeep Cherokees.

There may only be one Jeep; but if they’re building it, we don’t want it!

Finally, in News of the Genetically-Challenged, we learn….

Sen. Manchin wants MTV to cancel West Virginia-set ‘Buck Wild’

 

West Virginia Sen. Joe Manchin wants MTV to cancel its new series “Buck Wild,” saying the raunchy reality show set in his state plays to “ugly, inaccurate stereotypes.” In a letter sent Friday to MTV President Stephen Friedman, Manchin wrote that he was “repulsed” by the show.

“As a proud West Virginian, I am writing to formally request that you put a stop to the travesty called ‘Buckwild,'” wrote Manchin, who used to be governor of the state. “Instead of showcasing the beauty of our people and our state, you preyed on young people, coaxed them into displaying shameful behavior — and now you are profiting from it. That is just wrong.”

In other words, Manchin is upset at MTV’s portrayal of West Virginians as ignorant.  Gee, Joe; what would YOU call a state whose love of coal is second only to its adoration of guns….yet elected a U.S. Senator from a political party antithetically opposed to both?!?

Magoo