SOAKING THE RICH? WHO CARES?

"Who cares if the Bush tax cuts for the wealthiest Americans expire? I'm not one of them, so as long as MY tax cut remains in place, why should I care? It's nothing to me." This, understandably, is the attitude of most middle-class Americans. I get it. But what is the attitude of the 43% of American wage-earners who pay no federal income taxes at all?
Do they care if the rich get soaked? Nope. (See the above.) Would they care if the tax rates for middle-class tax-payers went up? Nope. If they're not paying, they don't care who does. And since they're not paying, why should they care how tax money is being spent? They have no skin in the game.
Do you think that it is desirable that so many Americans should be disincentivized from caring about how tax money is spent? Let's recall the advice of Deep Throat: Follow The Money. That's how you know where the Federal Government is going. Unless the government is spending YOUR money, you don't care where it comes from, and you don't care where it goes.
This is why all Americans need to pay income taxes, even if just a little bit: It makes you care, it makes you pay attention.

BERNANKE ON THE NATION'S ECONOMIC FUTURE

Today, Fed Chairman Bernanke explained that by the year 2020, the federal debt ratio to GDP could exceed 100%. The debt could be larger than the entire U.S. economy at that time, unless there existed the political will to do things necessary to avoid this result.
Don't worry, though. Treasury Secretary Geithner said that President Obama's budgetary measures will prevent that outcome. The Congressional Budget Office agrees with the secretary. They say that if things go as well as President Obama predicts, the debt to GDP ratio will only go to 90% by 2020.

WHEW! That was a close one.

DRILL, OBAMA, DRILL!

Everyone has known for a long time that the only way in the world that California can hope to ever balance its budget is to expand off-shore oil drilling, and get healthy on the royalties that it would receive.

Now recall Candidate Obama deriding Sarah Palin's "drill, baby, drill" slogan, saying that off-shore drilling would not save Americans any money. Now he has changed his mind about this, and will support drilling in the Gulf and the east coast, and in Alaska. Great. Look for Arnold to press for drilling off the California coast. This could easily be done using parallel drilling from existing platforms.

Now recall Teddy Roosevelt and his successful efforts to acquire lots of land in the western states, creating lots of national parks, reserves, and monuments. He was a great progressive. Let's just say, without cynicism, that this was his only motivation in buying up the western states. The federal government owns virtually all of Nevada and Utah. The government owns a great deal of Colorado and Wyoming. It's true that there is great natural beauty in the west. But that's also where the nation's natural resources exist, including oil. The government owns very little land east of Colorado.

Now recall Maxine Waters threatening the nations oil execs by saying that she would not be opposed to nationalizing all the oil companies in the country. Recall Hillary Clinton screaming about the oil companies' "obscene" profits, and calling for a large tax increase on their "excess" profits.

Recall that a lot of countries have nationalized their oil resources. These include not only the OPEC countries, but also Mexico and Venezulea, among others.

Although President"s plan for drilling is quite modest, it is a sign that something else is afoot: A plan to gain additional federal revenue from oil. Not by nationalizing the industry, at least not at first, but to gain revenue from royalties by expanding drilling on federal lands, and taxing the increased profits of oil companies.

Only a Democratic president can get this off. The environmentalists will be quieted by the fact that this kills two birds with one stone: Decreasing reliance on foreign oil, and solving the federal government's deficit problem. And throw in "job creation" as a rationale.

President Obama reluctantly got in the automotive business, the student loan business, the insurance and banking industries. Now watch him get in the oil business. Why would he do this? For the same reason that Willie Sutton robbed banks, and that middle-class tax increases are inevitable: Because that's where the money is.

PAUL KRUGMAN DISTORTS HISTORY

Liberal economists like Paul Krugman have always tried to sell the story that conservative politicians have a very sinister agenda: to intentionally erode the government's fiscal position to such an extent that social welfare/entitlement programs would have to be eliminated in order to reconcile the national budget. Most recently, Krugman claims that President Reagan's tax-cutting program was the mechanism through which which he attempted to accomplish this evil goal. That's not how Krugman and others portrayed Reagan's reputed "strategy" at the time. Back then, liberal economists insisted that Reagan's spending on military and national security initiatives (remember the Star Wars debate?) was secretly designed to take so much money out of the budget that there would be no choice but to eliminate welfare and other entitlements.
A couple funny things happened, though. Instead of the arms race bankrupting the U.S. economy, it bankrupted the Soviet economy. It was their government that was "fundamentally transformed" by Reagan's military spending, not ours. Also, if it had been Reagan's intention to ruin the nation's balance sheet by cutting taxes, he failed miserably. Revenues went up. Does anyone, even Krugman, really believe that President Reagan was disappointed in that result?

SKEPTICS AND DENIERS

I'm not big on conspiracy theories. I believe, for example, that the U.S. really landed a man on the moon. I don't think that the film of the landing was shot in the Arizona desert. I think that Lee Harvey Oswald acted alone. I don't think that FDR allowed Pearl Harbor to be attacked, just to get into WWII. I don't think that Bush stole the election from Gore. (However, everyone knows that Mayor Daley stole the election for JFK in 1960.) I don't believe that the U.S. government was complicit in the 9-11 attacks, or that the Jews were behind it. I believe that the Rosenbergs were guilty as sin. The Holocast is not a hoax. There was no UFO at Roswell.
There is only one thing in history I'm not sure about. "Shoeless" Joe Jackson might have actively tried to throw the 1919 World Series. I hope it ain't so, but I don't know.
Conspiracy theories abound. For every true believer you can name, there is a skeptic or denier. I am always among them. This goes for global warming being a "man-caused" phenomenon. It also goes for the claim that President Obama's stimulus package created a single, solitary job. Or "saved" one. Nor do I believe for a second that the stimulus package prevented a national economic melt-down or prevented a second Great Depression as the president asserted yesterday.
I'm skeptical about any numbers released by the Bureau of Labor Statistics. I have no faith in the numbers released by the Obama administration regarding the U.S. GDP. I find it odd that our economy can be growing while energy consumption and gasoline prices are not increasing. Shell and Chevron have both reduced personnel, citing low demand as the reason. That make any sense to you?
What really bothers me, as a denier and a skeptic, is that the true believers think that I am stupid or crazy. President Obama has no patience for those that think the stimulus package has been an overall bust, or that Cash For Clunkers was idiotic. Now we go on to his "Jobs" bill, which is nothing more than another stimulus bill we can't afford. Does anyone think an employer will be motivated to hire an employee for $40,000 a year just to get a $5000 tax credit? Not lately.
I just don't believe a word of it.

"PAY-AS-YOU-GO" BROKE

The Democrats are all giddy about their new dedication to a "pay-as-you-go" strategy to control the deficit. Basically, this means that for every dollar of new government spending, there has to be an equal reduction somewhere else in the budget. Alternatively, a new source of revenue may be found to fund the new expenditure. Either way, the new spending is off-set, and the deficit is not increased. Good idea. It worked before when Clinton was president, and Congress was led by Republicans.
Now the picture is a little different. President Obama, as a candidate, assured us that taxes on persons making less than $250,000 per year would not see their taxes increased. Now he is an "agnostic" about tax increases on the middle class. It's not hard to foresee that any new expenditures will result in higher taxes, and that they will be rationalized as deficit-neutral under the "pay-as-you-go" program.

OBAMA GIVETH, THEN TAKETH AWAY

The $787 billion stimulus package had a little provision called the "Make Work Pay" tax credit. This how President Obama gave a "tax cut" to 95% of Americans. It wasn't a cut in marginal rates, as tax cuts are commonly understood. It was a tax credit, but not as tax credits are commonly understood, either. Usually, if you get a tax credit, it doesn't come until you file your tax return, and then it is deducted from the amount you owe, or is added to the amount of your refund. That's not how this one worked.
This tax credit was given to tax payers in advance by a decrease in the amount of federal withholdings. For individuals, it amounted to about $400; for joint filers, about $800 over the course of a year.
But wait...
What if a person had more than one job? Or was drawing a pension or Social Security while still working? OOPS! In these cases, both paychecks had reduced withholdings. There was a double-dip when the worker was entitled to only one scoop of tax credit. What now?
They'll have to pay it back. It's like getting a loan that you didn't ask for, and didn't know you had received. But on April 15, the loan is due in full. Millions of taxpayers don't know what's in store for them.
That's the bad news. The good news is that the IRS expects that most taxpayers who will have to pay back their tax credit will not have to send in additional money with the amount they would ordinarily owe to pay their taxes. They will simply get a smaller refund than they were expecting.
Maybe that's bad news, too.

MASSACHUSETTS SENATE ELECTION

There is much to say about the ironic election of Scott Brown to fill the senate seat of Ted Kennedy. This election is seen by many as a referendum on the agenda of President Obama generally, and on the health care bill specifically. While this may be true, there is one factor which must be kept in mind in interpreting the results of this election. Massachusetts already has had a law on the books which provides health care for its citizens. The health care bill pending in Washington offers nothing for Massachusetts. If it were to pass (and this is not certain), the people of Massachusetts would be taxed to provide health care for the remainder of the nation without receiving any benefit themselves. No wonder the pending national health care bill was unpopular, and this contributed to a big Republican victory.

I THINK YOU MISUNDERSTOOD THE PRESIDENT

He didn't say anything about "carpet tacks". He said "CARBON TAX".

TAXING THE BANKS

The federal government is beginning to think that they are not going to recover about $120 billion in TARP money that was used to bail-out American car companies and AIG. What's the surprise? GM never had any hope of repayment. So now, what to do? To get about $100 billion, President Obama is considering taxing what he believes are the windfall profits of the biggest banks in the U.S.
These are the same banks that themselves got a TARP bail-out, and have repaid the money with interest. Wasn't that the deal?
Now that the banks are in "bonus season", everyone is watching to see how huge the banks' bonus pay-outs will be. No doubt, they will be large. And a lot of people will be angry about this, President Obama among them. His rationale for taxing the banks will be based on their bonus payments, and his belief that the banks' accepting TARP money in the first place creates a social obligation on their part to pay the debts of other companies that cannot pay their own.
So what will be the consequence for large banks which will be taxed? Well, for one thing, they will have less money to lend. (I know they are not lending anyway. That's not the point. We've been over this before.) Secondly, President Obama's apparent hostility toward profit-makers will be demonstrated once again. This will create the suspicion among the business community that they will also be subject to new taxation in the future. This will contribute to the "uncertainty" that most people believe is causing businesses to avoid new hiring. And that defeats any jobs program you can name.