Council on Foreign Relations

Democrats: Free Market Capitalists-No, Crony Capitalists-Yes

by Bill O'Connell on December 3, 2010

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The latest news on the economy is not encouraging: a mere 39,000 jobs added and the unemployment creeps ever closer to 10% at 9.8%.  In spite of this, or apparently ignorant of it, the lame duck House voted yesterday for another whopping tax increase on the most productive among us. Yes, yes, they will beat the class warfare drums about tax “cuts” for the rich, when what they are voting on is not a cut at all, but either leaving things the way they are or raising taxes.  With the recovery barely showing a pulse, it is not the time to take money out of the hands of free market capitalists and put it in the hands of the government.  Who do you think can pull the economy out of the doldrums, entrepreneurs or government bureaucrats?

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Avoiding or Creating Catastrophe?

by Bill O'Connell on February 10, 2009

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President Barack Obama held his first press conference last night and did a masterful job of controlling the communication while dodging any hint that he let this stimulus package spin out of control, at the hands of Nancy Pelosi.

Elkhart, Indiana

I found it curious that President Obama chose Elkhart, Indiana, the RV capital of the world, as the backdrop for the current economic situation.  After all, in the campaign he said that driving SUVs and RVs was irresponsible.  What kind of gas mileage does an RV get?  He campaigned on Cap and Trade.  What would Cap and Trade do to the good people of Elkhart, Indiana if implemented?  How many people are going to out and buy an RV, which can cost up to $600,000, with the $10 per week tax cut President Obama is proposing.  Remember, he is dead set against across the board tax cuts, which could actually prompt an evil “rich person” to buy an RV.  It reminds me of the 10% tax on luxury yachts sales that killed the boat building industry and put many blue collar people out of work.

Disaster by Design

Of all the schemes tried over the years, from the Great Depression forward, to stimulate the economy, why does this President insist on going with the ones proven not to work?

No less an authority than FDR’s Treasury secretary and close friend, Henry Morganthau, conceded this fact to Congressional Democrats in May 1939: “We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and if I am wrong … somebody else can have my job. I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises … I say after eight years of this Administration we have just as much unemployment as when we started … And an enormous debt to boot!”

Spending in the Great Depression didn’t work and that is according to the guy doing the spending.  Last night President Obama mentioned the lost decade in Japan.  However, all of the massive public works spending in Japan during that decade didn’t work.

What did Japan get from sustained and massive public works spending by the LDP after a real estate bubble burst in the late 1980s?  According to a recent article in the IHT, one thing is clear:  taxpayers ended up being saddled with the largest public debt in the developed world, totaling 180 percent of its $5.5 trillion economy.

While there are disputes over how to view the results, the Japanese appear to have learned a lesson, while US officials like Treasury Secretary Timothy Geithner, who spent time as a financial attaché in Japan after the collapse, appear to determined to repeat it on a larger scale

President Obama alluded to the “failed policies of the last eight years,” as if tax cuts created this mess. But today, Treasury Secretary Geithner opened his remarks on the bank bailout by basically saying that government action or inaction coupled with Wall Street excesses caused the financial debacle not tax cuts.  They were:

  • Interest rates too low for too long – driving up home prices
  • Complicated financial intruments that no one understood bundling mortgages
  • Failure of government oversight
  • People being encouraged to borrow beyond their means (by government)

But we are supposed to believe that only government can get us out of this.  So, government created the mess, they are ignoring what has worked in the past (tax cuts: Kennedy, Reagan, Bush), choosing those things that were proven failures (spending: Great Depression, Japan) and we’re supposed to be angry at Republicans for putting up a goal line stand to protect us from this impending disaster.

If this passes, be afraid, be very afraid

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Can’t Anybody Here Play This Game?

by Bill O'Connell on January 31, 2009

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President Barack Obama

“Can’t Anybody Here Play This Game,” is what Casey Stengel reportedly said while watching his team, the New York Mets.  The same could be said of the Democrats when it comes to paying taxes.  The Democrats are the ones who rail against tax cuts for the rich.  They don’t believe in lower tax rates to stimulate the economy, but if these wealthy Democrats find taxes problematic, they just don’t pay them.

We now hear of another nominee, Tom Daschle, former Senate Majority Leader, has a $140,000 tax problem. $140,000! Most Americans would like to make that in income, let alone owe that in taxes.  This follows on the heels of Treasury Secretary Timothy Geithner paying back taxes of $34,000 and Charlie Rangel, Chairman of the House Ways and Means Committee that writes the tax laws, paying $10,800 in back taxes.  We’d probably have a balanced budget if all these rich Democrats only paid the taxes they owe rather than fighting against tax cuts for everyone.

Here’s Daschle’s excuse for his tax problem:

“Mr. Daschle told committee staff that he had grown used to having a car and driver as Senate majority leader and didn’t think to report the perquisite on his taxes, according to staff members.”

Two things come glaringly into view here.  First is the overall arrogance that these “public servants” feel they deserve privilege.  They have no concept that in the real world not everyone has a car and driver provided by their employer. In this case the employer is all the Joe Sixpacks out there.  The second thing is that these problems were discovered and fixed, in the cases of Daschle and Geithner, only after they were nominated for positions in Obama’s cabinet.  So, what if they weren’t nominated?  Do you think that this tax revenue that is legally owed to the government (you and me) would still be in their pockets?

We have the chairman of the committee that writes the tax laws failing to pay his taxes.  We have the Treasury Secretary who oversees the Internal Revenue Service failing to pay his taxes.  We have the former Senate Majority Leader who ran the senate that passes all laws failing to pay his taxes.  Do you think it’s too hard to figure out how to comply with our tax code?

It’s time to scrap the tax code and go to a simple flat tax that you can file your return on a post card.  Let’s put the $200 billion that Americans spend each year on tax compliance back into the economy.  Let’s make sure that all these rich Democrats pay the taxes they owe.  Do these two things and we probably won’t need a stimulus package.

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