Categories
tax policy

At Risk of Drowning

To those who hold that government should be all things to all people at all times, the prospect of cutting back the ever-escalating level of government spending is a non-starter. Like their chief spokesman in the White House, they propose a different solution: Make “the rich” pay more.

Never mind that while President Obama talks about socking “millionaires and billionaires” who “can afford it” with higher taxes, the hikes are actually designed to wallop folks making $200,000 a year. That’s actually a tad less than a million. In many areas, such a salary hardly qualifies one as rich.

We’re supposed to ignore the fact that federal income taxes remain progressive. The richer you are, the more you pay. That’s why the top five percent of earners pay 59 percent of federal income taxes, while roughly the bottom half pay nothing at all.

“Fair” becomes slippery.

Also slippery? The real-world outcomes. Say tax rates were raised enough that deficits might be covered. What would happen?

Just recently I had dinner with a couple of millionaires. “You know, we don’t have to work,” they told me. “We already have enough money to live out the rest of our lives, so if we’re going to be punished tax-wise, we’ll simply retire.” Comfortably, in fact.

But what about those they employ? What about the enterprises and jobs they won’t create?

Maybe punishing productive folks with even higher taxes isn’t such a great idea.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets national politics & policies

Competition Works Even With Limited Info

Few of us understand all our options when we shop for homeowners’ insurance.

The New York Times’s Paul Krugman riffed on this, arguing that “When people call for ‘consumer choice’ in health care, what this mainly comes down to isn’t comparison shopping on actual care . . . but rather comparison shopping on insurance policies. And that’s basically impossible even for home insurance, which is a lot simpler than medical insurance.”

Krugman calls a free market in medical insurance “fantasy.”

Yet the illusions involved in buying insurance also apply to non-market medical coverage.

Consider: Most people with low-price insurance like their coverage at least so long as they don’t have to make many claims against it. That’s because insurance is one of those things you buy hoping not to have an occasion to require it.

Something similar happens in single-payer medicine. Some Europeans (especially the young and healthy) praise their state systems that cost them next to nothing out of pocket, patching up their scrapes, mending their bones “for free.”

But wait till they are old and really sick, and on a multiple-month waiting list for an MRI or cancer treatment. Rationing-by-waiting can be a killer.

Bottom-line this: In a competitive insurance market, on learning of poor performance by your carrier, you can drop your insurer like a hot potato. In single-payer systems, you’re stuck. In line. Hoping not to get something too taxing on the system.

But you do have a choice in coffins.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets media and media people national politics & policies

What’s Going Up

When it comes to government policy and the politics that supports it, why people advocate what they advocate can get complicated.

It’s obvious that people don’t always vote their wallets, their narrowly perceived “self interest.” But it’s just as obvious that even the biggest advocates of “sacrifice” and “public spirit” often come off as greedy and narrowly pandering to at least some interests.

And then there’s the issue of fuel to throw on the fire of ideology.

Gasoline, especially, leads to some bizarre expressions of opinion.

When gas prices rise, people talk “conspiracy.” Chris Cuomo makes the case that “speculators” drive fuel prices up — though I notice that neither he nor his guest seemed much inclined to use actual economic analysis to explain anything. “The facts” Cuomo makes much of are embarrassingly superficial.

Two U.S. senators now push for regulators to “apply the breaks” on speculators. Current prices are, as one of them puts it, “unwarranted.”

In past decades, I remember some prominent politicians talk about adding huge taxes to gas, “just like in Europe,” to discourage consumption and “encourage green energy” and thereby “save the planet.”

I don’t hear those notions often, anymore. Could it be that none of us wants to pay more, so when gas prices rise, we forget our ideologies and other fine notions and just yearn (or scream) for cheaper gas?

Not exactly a rational attitude towards policy. But maybe not that mysterious, either.

This is Common Sense. I’m Paul Jacob.

Categories
term limits

Term Limits for Cuba?

You can’t cheer some victories — they just don’t seem real.

I mean, what can you make of the “victory” for term limits represented by Raul Castro’s endorsement of the reform during an endless speech at his country’s Sixth Communist Party Congress?

Castro told fellow commies that political officials, including El Presidente, should be limited to two consecutive five-year terms. Seems that with the Castro brothers about to shuffle off this mortal coil, decades of dictatorship have shrunk the pool of well-tested vicious ranters experienced maligning capitalist running dogs and running the country into the ground.

The dear leader’s speech touted a laundry list of proposed changes to Cuba’s socialist system, including legalizing the sale of cars and homes, a possibility the party has been “studying.” Some of these reforms might take effect and make life a little easier for Cubans.

Perhaps Raul Castro, 79, reflecting on his ailing fratello’s disastrous half-century dictatorship (1959 to 2008, more or less), has decided Cuba’s socialism and autocracy don’t really work after all.

It’s happened in other moribund societies.

But even if presidential term limits should (against all odds) be enacted before Raul kicks the bucket, they won’t mean much if his successor decides they don’t mean much. And like other critics of the regime, I doubt that Cuba will be the country to buck the trend of governments “restricted” by term limits that are not worth the tissue-paper constitutions they’re written on.

This is Common Sense. I’m Paul Jacob.

Categories
ideological culture media and media people

The AP’s Memory Hole

In our age of the Internet, cheap digital video recorders, etc., it’s harder than it once was to enforce an “official” version of an event . . . . the un-airbrushed knowledge of which might embarrass some potentate.

Memory-tweakers keep trying, though. Including Winston-Smith wannabes at the Associated Press.

An example is President Obama’s appearance at a wind turbine plant, where he made a pitch for “energy independence,” a concept presidents have been pitching at us at least since the long gas lines of the 1970s. One concern of attendees was the latest bout of high gas prices, caused by inflationary pressures and uncertainty about the Middle East.

According to an early version of the AP’s report, “Obama needled one questioner who asked about gas prices, now averaging close to $3.70 a gallon nationwide, and suggested that the gentleman consider getting rid of his gas-guzzling vehicle. ‘If you’re complaining about the price of gas and you’re only getting 8 miles a gallon, you know,’ Obama said laughingly, ‘you might want to think about a trade-in.’” The passage downplays how jovially patronizing the president was even after it became clear that the questioner had ten kids to support.

Obama’s unscripted condescension toward a struggling plant worker is not so outrageous as the AP’s strange memory-hole behavior. The incident was later scrubbed from their report. But InstaPundit’s Glenn Reynolds saved a screenshot of the original passage. And there’s video.

This is Common Sense. I’m Paul Jacob.

Categories
tax policy

Tax Your Brain First

President Obama thinks that the federal government should tax the rich more, starting by closing itemizations “for the wealthiest 2 percent of Americans.”

He says this will go a long way to reducing the deficit. But in the very sentence he advances it, he says it would “reduce the deficit by $320 billion over ten years.” Not in the first year, which might amount to something, but over a decade’s long stretch.

Big deal.

But, baby steps. Anything to raise taxes.

Democrats in Congress need to tax their brains, first.

Unlike the bulk of the population, the rich don’t have to earn more to retire. That’s what it means to be rich. So, the more you take from their incomes, the less incentive they have to go out earning incomes.

When tax rates rise, greater numbers of wealthy folk switch employment of their capital from productive enterprise (“making more”) to consumption. Not only are they then taxed less, but they employ fewer workers, who therefore pay fewer taxes.

This adds up, as can easily be seen by graphing tax revenue along with top marginal tax rates since World War II. Result? Tax revenues tend to hover just under 19 percent, despite radically different tax rates. As Reason TV’s Nick Gillespie puts it, “Any budget plan based on revenue being better than 19 percent of GDP is just blowing smoke.”

Which suggests where Obama’s audacious hope to resolve the federal budget crisis by raising taxes will end up — in smoke.

This is Common Sense. I’m Paul Jacob.

Categories
folly free trade & free markets

Expensive Cheap Energy

What is “green” energy?

There are two types. First, there’s photosynthesis.

Green plants sustain themselves through photosynthesis, creating energy for their own growth from the light of the sun. We harvest that energy pretty efficiently, with a reaper after most of the hard work has already been done. The sun is a great partner in this cost-effective form of “green” energy, as are carbon dioxide, water, soil minerals and harvesting equipment.

Then you’ve got your feel-good, ideologically motivated “green” energy, which needn’t be cost-effective at all! No matter how expensive creating this energy might actually be, the only thing that counts is whether participants in the process can declare that they are “saving the environment.” What difference, then, does it make whether far more money, and energy, is lost than gained thereby?

Such seems to be the notion behind the University of North Texas’s decision to install 36 “elliptical” exercise machines to turn the school into what the manufacturer, ReRev, calls “the largest human power plant in the world.”

The machines reportedly cost the school $20,000 and presumably required energy to build, pack, ship. But the machines also convert energy exerted during exercise to electricity at the rate of one kilowatt-hour every two days. A kilowatt-hour costs on average about ten cents in the North Texas area. So the cycling produces less than a penny of energy per hour.

But hey, at least it’s a workout.

This is Common Sense. I’m Paul Jacob.

Categories
ideological culture tax policy

The Audacity of Sleep

During Wednesday’s big speech, just as President Obama laid into Rep. Ryan’s Medicare reform proposal, Vice President Joe Biden skirmished with the Sandman. Zzzzz.

Obama wasn’t boring, though. He had a theme.

As he saw it, the Republicans’ “pessimistic” vision is of an “America [that] can’t afford to keep the promise we’ve made for our seniors” or “invest in education or clean energy” or fix “our roads” or afford to do all the cool things done by South Korea, Brazil, and China.

He didn’t explain how it might have come to pass that our government became disabled. He barely mentioned previous budgets’ waste — on goofy projects, overpayments, duplicated efforts, and undeclared, never-ending wars. Or how government regulation and subsidy might be the reason many people cannot afford medical insurance.

Or that if the government doesn’t invest in something, it doesn’t mean that private investors aren’t investing.

But he did mention his opposition to “more than $1 trillion in new tax breaks for the wealthy.”

And then came the corker: “In the last decade, the average income of the bottom 90 percent of all working Americans actually declined. The top 1 percent saw their income rise by an average of more than a quarter of a million dollars each.  And that’s who needs to pay less taxes?”

Wow. America’s wealthiest merely “saw their incomes rise”? They didn’t actually do something for their gains?

Maybe Obama was napping while others were working.

This is Common Sense. I’m Paul Jacob.

Categories
too much government

Moolah for Media

Has Congress rescinded the Obamacare yet? No?

Bad news if you favor free-market medicine. Nifty news if you’re a doddering corporate dinosaur of old media — like the Washington Post and CBS New and NBC News — with millions, or billions, in the kitty. And zero compunction about holding out a tin cup for funds extracted from taxpayers.

The Cato Institute’s Michael Cannon alerts us to the emergency resuscitation these institutions are receiving from Obamacare’s “Early Retiree Reinsurance Program.” The Post got $570,000 in extracted-from-taxpayers payoffs (some critics call ERRP a “slush fund”); CBS got $720,000; and General Electric, one of the owners of NBC Universal, got $37 million. Verizon, AT&T and sundry labor unions are also snatching up the subsidies.

There’s $5 billion allotted to this Obamacare slush fund for early retirees, which is not supposed to run out until 2014. But almost $2 billion have been distributed to corporations already. (To be fair, everybody knows that early projections of the long-run costs of wondrous new government programs tend to be conservative, understated, modest, even bashful.)

Cannon and others argue that when reporting on Obamacare, journalists at such outfits should disclose that their employers have received the massive subsidies. Let viewers know about the bribes so that they can better evaluate the pro-interventionist spin typical in these venues.

Fine. But I have an even better suggestion for the wealthy corporate mendicants: Don’t take the cash to begin with.

This is Common Sense. I’m Paul Jacob.

Categories
ideological culture individual achievement

Atlas Screened

John Galt had it right in Atlas Shrugged when, stepping to one side so that the whole world could see the gun being pointed at him, he told the politicians and bureaucrats: “Get the hell out of my way!”

Want markets to work? Leave markets alone. Leave people alone.

In the wake of the financial crisis of 2008, Rand’s perennial bestseller has been selling even better. Now sales of the apocalyptic fable are about to jump again. After 18 years trying to bring a studio on board, rights holder John Aglialoro decided to produce the movie himself.

He made that decision in April last year. Filming began two months later, just before his option would have expired.

“I have been an entrepreneur with companies in different industries — from airlines to health care, oil services, and exercise equipment — and I have had to deal with government in every one, at every step of the way,” says Aglialoro. “It’s a constant drain of time and energy. We could be in the 24th century today, in terms of technology, innovation, and wealth if it were not for all the controls. . . .

“Atlas Shrugged is my fortification against all that. It’s a liberation of the human spirit. That’s what I get from making the movie. And that’s what I want people to get from watching it.”

The movie hits theaters April 15, 2011. Catch the trailer online. And a scene.

This is Common Sense. I’m Paul Jacob.