I guess Senator Rand Paul reads Contentions. At least his opening statement tracks what I wrote this morning exactly.
He said, for instance, “I am offended by the spectacle of dragging in here executives from an American company that is not doing anything illegal. If anyone should be on trial here, it should be Congress.”
The ongoing IRS scandal has struck such a nerve with the public because it is a clear example of a prying, ever-present government abusing its revenue-raising power and succumbing to the temptation of easy corruption. There are few things more outrageous with regard to the government’s ability to fund its own corrupt practices–but the latest scandal out of Florida may be one of those cases.
Media Trackers points to this investigation by Florida’s WTSP-St. Petersburg 10 News, which notes that the Florida Department of Transportation instituted a particularly dangerous way to wring more money out of motorists, and crossed federal standards to do so. At issue are the traffic light cameras, an unsafe plague on roadways rife with corruption across the country. The cameras are installed to catch motorists violating traffic rules, but the lawbreakers are usually on the other side of the cameras. From WTSP:
The New York Times is in a state of the highest dudgeon this morning as it reported that, “Even as Apple became the nation’s most profitable technology company, it avoided billions in taxes in the United States and around the world through a web of subsidiaries so complex it spanned continents and went beyond anything most experts had ever seen, Congressional investigators disclosed on Monday.”
It made this the lead story, not the terrible tragedy in Oklahoma. It even devoted the Quote of the Day to the story, quoting a law professor, “There is a technical term economists like to use for behavior like this. Unbelievable chutzpah.”
As Bethany has previously written, the problems with the new Internet sales tax, which passed the Senate this week, were depressingly obvious–even as the bill received Republican support. But perhaps the most unfortunate aspect of the bill is not that Republicans should have known better, but that they did know better and voted against both economic common sense and the best interests of small businesses around the country.
The legislation would have forced businesses to pay sales taxes in the home state of every online customer, thus adding a burden to doing business that large retailers could handle but their upstart competitors could not. But to listen to Republicans defending their votes in support of the measure, you could be forgiven for thinking that upholding crony capitalism was a virtue of the bill, not an unfortunate element to be downplayed. (Though it was called the Marketplace Fairness Act, Grover Norquist more accurately referred to it as the “Let People in Alabama Loot People in New York Act.”) Here, for example, is how John Thune is quoted by the New York Times:
It’s said that the road to hell is paved with good intentions. Like many proposals put forth in the last several years, the Internet sales tax bill (titled the Marketplace Fairness Act) currently working its way through the Senate is loaded with good intentions based on the idea of “fairness.” In reality and practice, the bill would end up like many liberal projects: a disaster for small business owners.
Think about those who run a business out of their home, a small shop providing products to a niche market of consumers. When an order comes in, the owner is the sole point of contact: they play the role of cashier, customer service, production and shipping. Despite the truly small nature of their small businesses these individuals would be forced to hire accountants or learn, track and charge the appropriate sales tax for each state in which a customer resides. They are faced with a choice: either spend a significant portion of their profit on an accounting professional, or spend a significant amount of time managing their own finances. A potential third option, only selling products to a select number of states, would be equally destructive for niche businesses that only survive by selling nationwide.
The most recent Gallup poll, which shows a majority of Americans believe that some of their neighbors have too much money and that the government should therefore confiscate and redistribute some of it, is likely to please the president, who based his reelection campaign on class resentment. Though Gallup paints this as vindication for the president on the message, it does expose the problem with how we tend to conduct the conversation of basing policy on that message. Gallup pronounces:
Inequality is and will continue to be one of the most important domestic political issues. President Barack Obama has consistently pushed for measures that he believes would provide those at the bottom end of the socioeconomic spectrum a fairer chance to succeed, and has coupled that with consistent arguments for higher taxes on those with high incomes and wealth. At this point, the American public would generally agree with Obama that wealth should ideally be more evenly distributed — and a modest majority, consisting mainly of Democrats and independents, appears to support the idea of bringing about that redistribution through heavier taxes on the rich.
In the 1930s an economic phenomenon known as a “strike of capital” helped prolong the Great Depression. A strike of capital occurs when companies, banks, and individuals with capital to invest or money to loan decline to do so for fear that the investments might not prove profitable due to business conditions or government action.
A strike of capital would seem to be what is going on now. As the New York Times noted in an editorial yesterday, American corporations are sitting on vast piles of cash. Apple Corporation alone has about $140 billion in the bank. Altogether publicly-listed corporations in the United States are holding about $4.75 trillion in cash, not far short of one-third of annual GDP. In 1995, they held only about $1.2 trillion in cash, and cash has about doubled as a percentage of corporate assets since that time, to 12 percent.
During a recent interview on NBC’s The Today Show, former Florida Governor Jeb Bush was asked whether the Republican Party should put revenue increases on the table in order to reach a grand bargain.
Governor Bush said it’s hard to imagine that, after the tax increases that went into effect earlier this year, one could argue we have a revenue problem. When pressed by Matt Lauer, however, whether there was any “wiggle room,” Bush said, “There may be [room for revenue] if the president is sincere about dealing with our structural problems.” And he went on to speak about the importance of growth as a way to increase revenues.
It didn’t take long for Bush’s critics to strike. As a story in the Washington Post put it:
Saul Bellow used to joke that while the unexamined life is not worth living, the examined life will make you wish you were dead. The political equivalent might be that we can’t live with taxation without representation, but taxation with representation is going to kill us.
By “us,” I mean those of us who like to find out what’s in a bill before Congress passes it; who would like our representatives to read bills before they vote on them; who want to see hearings on legislation before it is brought to a vote; and who would like to have it posted on a website for a few days before it is signed into law–just in case we have some questions after we find out what’s in it. For such people, Senator Rand Paul’s description of the Senate’s action in passing a $600 billion tax increase this week will be discouraging:
House Majority Leader Eric Cantor broke with Speaker John Boehner on the fiscal cliff deal vote yesterday, fueling speculation that he may challenge Boehner in Thursday’s Speaker election. At the Guardian, Jim Antle writes:
It’s rare for the top two members of the House leadership to split on an important vote. Bob Michel, the hapless leader of the House Republicans during a long period in the minority, and Newt Gingrich voted differently on the 1990 “read my lips” tax increase. They split again over the 1994 assault weapons ban.
Even less common is a House speaker and majority leader going their separate ways on big-ticket legislation. The last major example is when the Democratic-controlled House debate funding President George W Bush’s surge in Iraq. House speaker Nancy Pelosi allowed the measure to proceed to the floor and voted no. House majority leader Steny Hoyer voted yes.
House speakers typically don’t even vote at all unless it is necessary to break a tie. So it may have been a clarifying moment when speaker of the House John Boehner and House majority leader Eric Cantor parted ways on the deal that ended the long national nightmare known as the fiscal cliff. Boehner voted for the bipartisan agreement negotiated between Vice-President Joe Biden and Senate Minority Leader Mitch McConnell; Cantor breathed the final moments of life into the opposition.
As Antle notes, despite conservative frustration with Boehner, Cantor is the only one who could potentially rally enough members behind him to seize the gavel. And Breitbart reports that there may be growing support for it:
The deal to avoid going over the so-called fiscal cliff was a lousy one: tax rate increases during a weak economy, no spending reductions, nothing on entitlement reform. And yet if House Republicans had succeeded in derailing this deal, negotiated between Senator Mitch McConnell and Vice President Joe Biden, it would have been disastrous.
It would have led to much higher tax increases on all Americans, even beyond the increase in payroll taxes that will now go into effect, and triggered decimating cuts in the defense department. And it would have done a great deal to advance the storyline that Republicans — at least House Republicans — are extremists enamored with nihilism.
Just as it looked like a fiscal cliff deal was coming together, President Obama gave a partisan, sarcastic speech this afternoon that seemed intended to set back the entire process. As Jonathan wrote, Republicans have good reason to think the president’s goal is to go over the cliff. But they also suspect the White House is preparing to push for further tax increases, in addition to the hikes on individuals making over $400,000 (and families making over $450,000) a year.
“What they’re telegraphing to me is that when Republicans ask for spending cuts, [Democrats are] gonna say ‘You’re not getting those unless we get more tax hikes’,” said one Republican Senate aide after the speech.
If you’d like to have your New Year’s Eve thoroughly ruined, I’d suggest taking a look today at Mortimer Zuckerman’s piece over at USNews.com, “Brace for an Avalanche of Unfunded Debt.”
It’s so depressing because it’s true. The federal government keeps its books not in ways that most clearly reveal the true financial picture, but in ways designed, quite deliberately, to obscure that picture. This is for the short-term benefit of politicians and nothing else, the country be damned. And, as Zuckerman notes, unless something is done about this, and soon, that is exactly what the country will be.
The question at the heart of the Chuck Hagel controversy was always whether President Obama actually wanted Hagel as his secretary of defense, or whether it was all a gimmick to trick the press into further proclaiming the absurd-beyond-belief characterization of Obama’s cabinet as a “team of rivals.” You would think it would raise some eyebrows that this supposed ream of rivals all agree with each other. But Obama figured the press could be fooled again by appointing a registered Republican to run the Pentagon.
A gimmick, however, is generally not worth fighting for. But to understand why Obama thought the press could be fooled so easily into this nonsense, take a look at yesterday’s National Journal article, which broke the news that the White House is considering dropping Hagel. It’s a well-reported piece that got a scoop where everyone else merely had inklings. But notice the way this straight news story characterizes Hagel’s stand on the Iraq War:
In a strange about-face today, FreedomWorks has decided to withdraw its support of House Speaker John Boehner’s “Plan B” a day after declaring its support for the plan. Yesterday Dean Clancy, legislative counsel for the group, wrote “Speaker Boehner: Congratulations, you are moving in the right direction. You woke up and realized you have the power to say No to the Left. Stay the course. Go all the way to the FreedomWorks plan, and you’ll have it made in the shade.” This comes as the Heritage Foundation continues to beat the drums against Boehner’s plan, calling it, “the latest unsatisfactory proposal put forward by Speaker John Boehner (R-OH) to avoid the fiscal cliff. Boehner’s plan would protect most Americans, except for millionaires, from a tax hike. But even this is a poor fix because it ignores the real problem: spending.” Heritage’s more flexible legislative arm (due to tax restraints on the non-profit Heritage Foundation), declared, “Heritage Action opposes ‘Plan B’ and will include it as a key vote on our legislative scorecard.” Club for Growth has also been forceful with its opposition to the plan, joining smaller Tea Party groups.
While conservatives are eating their own over the plan, Senate Democrats have announced that they have no plans to vote on Boehner’s “Plan B,” even if it passes a House vote, as many are promising it will. The bill will therefore be dead on arrival, despite the fact that Senate Democrats voted for a similar plan almost exactly two years ago. There are no other plans under discussion from congressional Republicans, who are spending as much time fighting with conservative groups as they are with their Democratic counterparts.
One of the arguments some intelligent conservatives are making is that if Republicans agree to increase rates on the top earners in America, it will do irreparable damage to the GOP. The basic case goes like this:
If Obama succeeds and ends up getting a confession from Republicans that tax cuts are the problem, tax cuts are the cause, what happens to the next Republican who campaigns on tax cuts? Not going to have a prayer.
Now it may well be that raising tax rates will do significant damage to the Republican Party. It may be substantively unwise. And I’m certainly sympathetic to Republicans not wanting to play a role in something they think is bad policy.
But here’s where I think this analysis is wrong.
Last week, I wrote about the fact that President Obama’s approach to taxes as part of the “fiscal cliff” negotiations is billed as taxing the rich but would end up hurting the poor and possibly deepening inequality. Policies built on the flimsy populism of “fairness”–at least as modern Democrats define it–are quite often devoid of economic common sense. What’s more, the Democrats seem to know this.
The New York Times offers a “News Analysis” today in which it is revealed that the Republicans are right on the merits of most of the arguments, but Obama and congressional Democrats have boxed themselves in by relentlessly demagoguing the issue. Here’s the Times:
Another day, another bad “fiscal cliff” poll for the GOP. Bloomberg finds that nearly half of Republicans agree that the presidential election has given Obama a mandate to raise tax rates on the top income bracket:
The president goes into talks with Republicans amid broad public sentiment that his victory is a sign the electorate has spoken in favor of his positions on taxes and entitlements.
Sixty-five percent of Americans say the Nov. 6 results gave Obama a “mandate” on his proposal to raise tax rates on income over $250,000 and “to get it done.” Forty-five percent of Republicans agree.
All throughout the debate over Obamacare, polls showed the public opposed to the bill. That did nothing to stop Democrats from pushing the legislation through Congress, of course, and voters responded by staying true to their word: they voted out congressional Democrats in historic numbers in the next election. Democrats and the national media generally ignore inconveniences like voters when the opportunity arises to pass far-reaching legislation, but that instinct has kicked in on other matters as well.
For example, the New York Times has discovered that the current “fiscal cliff” negotiations pose something of a problem for democratically elected representatives whose constituents don’t want them to raise taxes. It turns out that Democrats are right when they say “elections matter”–though not only the presidential election. Now that the push for some tax increases as part of a final deal is gaining momentum, Republicans elected by voters who oppose such tax hikes are caught between representing the will of their electors and what liberal editorial boards tell them is the good of the country:
The latest Gallup poll has two interesting, and seemingly contradictory, findings:
President Barack Obama and Speaker of the House John Boehner met at the White House on Sunday, but there has yet been no announcement of a negotiated agreement to avoid the mandated sequestration of government funds for defense and other federal spending, and the increase in tax rates for most taxpayers.
Seventy-three percent of Democrats want their leaders to compromise, little changed from 71% last week. But Republicans and independents express more widespread interest in compromise than they did last week — with Republicans moving from 55% to 67% in favor of compromise, while independents moved from 61% to 70%.
So Americans seem to want compromise — in theory. In reality, President Obama is still getting much higher approval ratings than Republican leaders in congress in the same Gallup poll (48 percent compared to 26 percent), even though he has been the party most unwilling to compromise.