The Myth of Scandinavian Socialism

Here is the Myth exposed:

No, Bernie Sanders, Scandinavia is not a socialist utopia

When Bernie Sanders was asked during CNN’s Democratic presidential debate how a self-proclaimed socialist could hope to be elected to the White House, he gave the answer he usually gives: Socialism has been wonderful for the countries of Scandinavia, and America should emulate their example.

“We should look to countries like Denmark, like Sweden and Norway, and learn from what they have accomplished for their working people,” Sanders said. When the moderator turned to Hillary Clinton, she agreed that America has to “save capitalism from itself” and that, yes, Scandinavia is great. “I love Denmark,” declared Clinton. It was the only time in the debate a candidate uttered the verb “love.”

Liberals have had a crush on Scandinavia for decades. “It is a country whose very name has become a synonym for a materialist paradise,” observed Time magazine in a 1976 story on Sweden. “Its citizens enjoy one of the world’s highest living standards. . . . Neither ill health, unemployment nor old age pose the terror of financial hardship. [Sweden’s] cradle-to-grave benefits are unmatched in any other free society outside Scandinavia.” In 2010, a National Public Radio story marveled at the way “Denmark Thrives Despite High Taxes.” The small Nordic nation, said NPR, “seems to violate the laws of the economic universe,” improbably balancing low poverty and unemployment rates with stratospheric taxes that were among the world’s highest.

Such paeans may inspire Clinton’s love and Sanders’ faith in America’s socialist future. As with most urban legends, however, the reality of Scandinavia’s welfare-state utopia doesn’t match the hype. [...]

The rest of the article goes into detail about how Scandinavian prospered in spite of socialism, not because of it. How socialism nearly destroyed their prosperity, and how they have spend years rolling back welfare and taxes, and re-introducing free market reforms. How much of the success of Scandinavian countries has to do with who they are:

[...] The real key to Scandinavia’s unique successes isn’t socialism, it’s culture. Social trust and cohesion, a broad egalitarian ethic, a strong emphasis on work and responsibility, commitment to the rule of law — these are healthy attributes of a Nordic culture that was ingrained over centuries. In the region’s small and homogeneous countries (overwhelmingly white, Protestant, and native-born), those norms took deep root. The good outcomes and high living standards they produced antedated the socialist nostrums of the 1970s. Scandinavia’s quality of life didn’t spring from leftist policies. It survived them. [...]

Read the whole thing, it's short and it gets to the point, with many embedded links to back up what it says.

BTW, I've no objections to looking at Scandinavia as a model, so long as we look at everything, their successes and their failures. We could learn a lot from both of those. If some things they've done were successful and could be adopted by us, so be it. It's just the sweeping generalizations based on fantasy that I'm leary of. Read the whole article. Why adopt policies from the Scandinavians that they themselves have discarded as unworkable? Even policies that work for them in their largely homogenous culture, may not necessarily transplant to ours. When looking for role models, let's keep it REAL, shall we?
     

Tax Collection: where to find 3.3 billion

The government's own employees:

Federal workers owe IRS the $3.3 billion
Lots of people haven't paid all their taxes -- including employees of the federal government.

The IRS released data this week showing that roughly 3.3% of federal employees and retirees owed $3.3 billion in unpaid taxes as of Sept. 30.

That means they either couldn't pay the full amount owed when they filed a return, or they got snagged by an IRS audit and were told they owed more than they already paid.

The data, released after USA Today requested it under the Freedom of Information Act, broke down delinquency rates by departments and independent agencies.

At the low end of the scale was the Treasury Department, which had a 1.2% non-compliance rate.

A big part of Treasury is the IRS itself, which had a delinquency rate of 0.9%, according to an agency spokesman.

The rate among the population at large is at least 8.7%, the IRS estimates.

A few weeks ago the IRS found itself in hot water with Congress for having paid $1 million in bonuses to 1,100 IRS employees who were late in paying their taxes or had willfully understated their tax liability or income.

But it turns out the delinquency rate among Congressional staffers is higher -- 4.87% in the House and 3.24% in the Senate -- than those of IRS workers.

The government departments with the highest non-compliance rates were the Department of Housing and Urban Development (5.29%), the Department of Veterans Affairs (4.38%) and the Army (4.28%).

Among large independent federal agencies, which have at least 1,000 employees, the biggest offender was the Court Services and Offender Supervision Agency (8.05%), followed by the Government Printing Office (7.99%), the Smithsonian Institution (6.7%) and the Federal Reserve's board of governors (6.51%).

On the low end of the scale was the National Credit Union Administration (1.75%), the U.S. Nuclear Regulatory Commission (1.97%) and the Executive Office of the President (2.05%).

     

Will the Middle Class Survive?

4 Things Politicians Will Never Understand About Poor People

Off the top of your head, how many of your friends can you think of make less than $11,000 a year? Maybe they work some mind-numbing part-time job, taking cover charges and stamping hands at a strip club. Or if you're a bit older, how many families do you know of who have one person working, bringing in less than $23,000 to support a spouse and a couple of kids? There's nothing wrong with either of those things ... but those numbers are the poverty threshold in the U.S., and in my area of the country, it encompasses a fudging poopload of people (sorry, I'm trying to cut down on my cursing).

Poverty is a hot topic for politicians, but it seems like every time they open their mouths about the subject, stupid falls out. There's a huge part of me that wants to grab them by their orphan skin lapels and scream reason into their preciously oblivious brains, but the logical side of me knows it won't matter.

[...]

But of all the poor people I've known over the years -- and I have known a lot -- I have come across very few able-bodied, able-minded people who didn't do something to bring in some money. Even the ones who didn't have so much as a part-time job still managed to at least find temporary seasonal work mowing lawns, shoveling snow, or standing on street corners and playing the guitar with their penis.

So if the issue is that these people are watching reruns and collecting government checks, guess what: 91 percent of government benefits go to the disabled, elderly, or working households. Not a typo -- 91 percent. You're free to speculate that some of those people could try harder or are faking their disability or whatever, but there's no way the reality lines up with this politician fantasy of the lazy masses who just greedily rub their hands together while leeching their unfathomable riches from the always generous American populace.

[...] 

OK, let's be calm here. Let's just take a deep breath and talk about this like the rational, well mannered, non-cursing people that we are. Here is an infographic that ran in the Wall Street Journal talking about how the new tax code would be "highly painful" for Americans. The graphic covers every possible scenario the Wall Street Journal can conceive of, from the single mom only making $260,000 a year to the retired couple trying to get by on a fixed income of $180,000:

Reading that dumb fucking mind turd of an image is like wiping my ass with my eyes. If you can look at that steaming pile of shit and not see what's wrong with it, you live in a different goddamn universe than the rest of us.

No, that didn't come from a politician, but this sure as hell does. That's Linda Sanchez, who is desperately trying to tug at our heartstrings by saying that she lives paycheck to paycheck. On her $174,000 salary. To pay for her multiple homes. Now, I understand that if you live a certain lifestyle and you're a limp dick at finances, it would be pretty easy to burn through that much in a year, but does that make us any more sympathetic? Fuck no, it doesn't. Even as one of the least wealthy members of Congress, she still earns three-and-a-half times more money than the average American household. And 16 times more than those at the very top of the poverty line.

So the question is, how can she possibly think of herself as poor? Because $174,000 a year is poor -- for a member of congress. They have no concept whatsoever of what life is like for someone getting by on what most working people make, let alone somebody subsisting on government aid. Although they can comprehend our income as a number, they cannot comprehend the lifestyle because they haven't lived it and they likely never will. You're not going to find these politicians hanging out in the poor section of town, scrounging change for weed (well, maybe Bill Clinton) -- they spend most of their time around other wealthy people -- other members of Congress (about half of which are millionaires), rich donors, high-powered business types, celebrities, etc. So their idea of "poor" or even "brokeass" is the pitiful bastard at the bottom of the chain who is living off of that measly $174,000 base salary because he or she doesn't have any other income on the side. Linda Sanchez is their version of poverty. [...]

My own income has always been a lot closer to $11,000 than those figures in the Wall St. Journal Info Graphic. And yes I get it, that a lot of people aren't sympathetic to people who make six figure salaries, complaining about taxes.

Yet that graphic was from an article in the Wall Street Journal last year. This year, 2014, many of those groups are getting slammed even harder with more taxes.

People in those income brackets used to put away money for their children's college education, buying a home, buying their own health insurance, saving money in 401k accounts for their retirement, invest in their own businesses in order to supply themselves with jobs and an income. They would use the money to become independent, and maintain their independence, by not having to borrow excessively, or rely on others to supply their needs for them.

That used to be considered a good thing, and why it used to be said that the middle class was the "backbone of America". They knew how to take care of themselves, and not be a burden to other people. The more of their money that is taken in taxes, the less they will have to do that with. Or to invest in their own businesses.

I can sympathize with people who struggle with only $11,000 a year. I've been there, and I'm not far from it now. But destroying the middle class isn't going to help the most people in the long run. A tide that lifts all boats, would be preferable to sinking the most productive boats.

A congress that is more interested in lifting all boats, instead of just looking out for it's own interests, might be a good step in the right direction. They could start by actually passing a budget, and living within it, like the majority of the people in this country have to do.
   

What's ahead for 2014 tax season

Ask Claudia:

Claudia's Crystal Ball: Tax Filing Season 2014

Each December as many begin to enjoy of the giddiness of the holiday season, I take the time to predict what the coming tax filing season will hold in store for tax advisors and their clients. These are my predictions for filing season 2014:

2014 filing season will not be as bad as 2013. Congress waited until the first week of January 2013 to tell us what the rules were for 2012. For 2013 there will be no retro-active changes, and the biennial list of expiring tax benefits will simply expire and be addressed mid-2014. For many, delayed tax forms meant filing season 2013 didn’t start until the first of March. IRS expects to be ready by the end of January 2014.

Higher income taxpayers with primarily investment income will be blindsided by additional taxes, and wonder why their tax advisors didn’t prepare them for the additional money they owe.

Higher income taxpayers with primarily earned income (in excess of $200,000 for singles and $250,000 for marrieds) will be blindsided by higher taxes this year, and wonder why their tax advisors didn’t prepare them for the additional money they owe.

The Supreme Court’s Windsor decision on the Defense of Marriage Act (DOMA) will create a need for time-consuming discussions with same-sex couple clients who recently married and find they owe additional taxes.

DOMA creates a need for time-consuming discussions with same-sex couple clients who want to discuss whether they should get married and how to avoid the higher taxes they will face. [...]

And that's just half her list. Follow the link to read the other five predictions.

     

Jesus was born in Bethlehem because of ....Taxes?

Yup. Looks like it:

The Christmas tax story

With Mary so close to delivering her child, why did she and Joseph risk traveling to Bethlehem? Taxes.

A census was ordered to determine the taxes due from the residents of the Roman Empire. Each person had to return to his home town to meet the decree's requirements.

So Joseph and Mary headed out from Nazareth in Galilee to Judea, specifically to the city of David known as Bethlehem, an estimated three-day trip, because Joseph was of the house and family of David.

And the rest is Biblical history. [...]

Follow the link for the scripture references and various embedded links.

Gosh. Taxes. They're everywhere.

Merry Christmas!
     

Can the IRS create powers for itself?

Powers based on the "Horse Act of 1884"? So far, the judge says "no":

IRS Beats A Dead Horse, Argues For Regulations At Appeals Court

Does the Internal Revenue Service have the right to regulate tax preparers?

[...]

The crux of the plaintiffs’ argument is this: Congress never gave the IRS the authority to license tax preparers, and the IRS can’t give itself that power.

U.S. District Court Judge James E. Boasberg agreed. In January 2013, he issued an opinion that would bar the IRS from regulating tax preparers, days before the new tax season officially opened for business. You can read the opinion here (downloads as a pdf).

The IRS appealed that decision and here we are, eight months later, back in court.

Oral arguments in the case were colorful, often punctuated by queries from the judges and occasionally, a joke or two. During arguments, the judges appeared skeptical of the IRS’ reliance on an 1884 statute, the “Enabling Act of 1884,” also referred to as the “Horse Act of 1884″ as sufficient authority to regulate tax preparers. The statute was the result of a post-Civil War concern about the abuse of the claim process for the value of dead horses and lost property during the war. To stem the tide of abuse, Congress granted the Secretary of the Treasury the authority to regulate the admission of agents representing claimants before the Treasury Department (the rise of the modern day Enrolled Agents), and to penalize those who failed to comply with the regulations. The Treasury published guidance for those agents – and that guidance is what eventually evolved into Circular 230. If that name rings a bell, you might have seen “Circular 230 language” at the bottom of attorney and tax professional emails.

The IRS argues that the law still allows for regulation of tax preparers. The statute predates the modern income Tax Code which was codified in 1913. Much has changed since – including Congress’ apparent reluctance to pass any laws granting the IRS specific authority to regulate preparers.

The amount of time that passed from the 1884 case and now didn’t go without notice in front of the panel. Consider this brief exchange between Justice Department Tax Division lawyer Gilbert Rothenberg and the panel:

Panel: That’s how many years?
Rothenberg: That’s about a century.
Judge: And then after a century, Treasury suddenly decides these words empower us to do this…?

Another exchange revolved around two simple conjunctions: “and” and “or.” Under the law, there are four criteria to be considered an agent. The statute uses the word “and” to connect the four but, as argued by Rothenberger, the IRS believes that “and” could also mean “or.” The panel didn’t seem convinced.

[...]

Shortly after the amicus brief in support of the plaintiffs was filed, I called up one of the parties, Joe Kristan, to ask him about his participation. Kristan is a CPA and authors the informative and entertaining Tax Update Blog. He doesn’t have an actual dog in this fight: CPAs are exempt from most of the regulations. So why, I asked, was he involved? He offered a laundry list of reasons: it’s bad law, bad policy and bad for the consumer.

In addition to the arguments cited by the plaintiffs that the IRS doesn’t have the authority to regulate tax preparers – and Congress has never stepped in to give them that power – Kristan has concerns about handing over even more power to the agency. Using an analogy from my profession, Kristan compared the law to giving the prosecutors the right to regulate defense attorneys.

During our call, we both agreed that there are bad tax preparers out there but Kristan used that fact to seize upon one of the main criticisms of the IRS scheme: there are ways of dealing with bad acts and these regulations won’t keep the bad preparers honest. It doesn’t, for example, deal with the issue of fraud in the industry. And, he says, those who can manipulate the system will now have the equivalent of a “seal of approval” from IRS, giving consumers a false sense of security.

But what about those education requirements and the competency exams? Kristan shrugs off the notion that some testing keeps taxpayers safe, saying that the test is a “literacy test, not a competency test.” He does believe that tax professionals should keep their credentials up and their skills sharp but feels that should be voluntary. The real problem with tax compliance issues, he says, simply won’t be resolved through more regulation. [...]

I believe the appeal by the IRS is still pending. But if it should fail (and IMO, that seems likely), congress is poised to give the increase in powers to the IRS: House bill would give IRS authority to regulate tax pros.

This link about the Horse Act of 1884 is interesting. It explains how it eventually lead to the creation of the designation of "Enrolled Agent".

Also see:

IRS' 'dead horse' tax preparer regulation argument doesn't appear to move federal appeals court

     

Taxes on Credit Unions?

It's a possibility, as government looks for more tax revenues:

www.donttaxmycreditunion.org/learn-more/

Credit unions promote the economic well being of their members, especially those of modest means, through a system that is member-owned, volunteer-directed and not-for-profit.

The credit union mission has always been to ensure secure financial choices at lower costs for their members. That’s why credit unions offer financial products that provide better returns on savings, reduced rates on loans and lower or no fees on services.

While credit unions are regulated by the federal and state governments, they are also governed by volunteer boards elected by their membership. Credit unions don’t answer to stockholders, but to each of their 96 million members.

Credit unions invest in people by helping those who have been traditionally underserved by banks. Groups like seniors on fixed incomes, single working moms, minority communities needing greater community investment, and small business owners struggling to raise capital all rely on credit unions for important financial services at reasonable costs.

While the big banks have abandoned small businesses in droves because they just can’t make enough money, credit unions promote their small business members in a struggling economy by providing low cost credit alternatives. This credit union investment means millions of jobs across America.

Unfortunately, the big banks and some in Congress want to raise taxes and impose new fees on 96 million credit union members who represent 40% of all Americans, yet represent only 6% of the assets in financial institutions. And, they want to do this despite the fact that credit unions are not-for-profit and meeting their core mission every day.

That’s wrong and will imperil the credit union movement that so many have come to depend on for real financial choice.

Don’t let Congress raise taxes on 96 million credit union members. Don’t let Congress eliminate real financial choice. Don’t let Congress destroy our credit unions.

To learn even more about credit unions in your community, or join a credit union please visit http://www.asmarterchoice.org/.

     

Oregon: The Best Tax Preparing State

Oregon: Land of many well-prepared tax preparers

A few years ago, Congressional investigators issued a report that should've caused Oregonians to swell with pride. And irritation.

Oregon's tax returns, the investigators found, were more likely to be accurate than the rest of the country's -- about $250 more accurate as of 2001, the Government Accountability Office found.

Unfortunately, that meant 1.56 million individual Oregon taxpayers paid $390 million more in federal taxes than they would have if they lived elsewhere, the report said.

Oregon: We do our taxes right. And we pay for it.

Last year, I reviewed online tax prep sites. This year, I figured I'd help those wanting live person helping.

As you see, you're in good hands in Oregon.

Still, you can overpay for your service. Not everyone needs to pay a Certified Public Accountant by the hour to do their returns. [...]

It goes on to give some good definitions of what LTPs, LTCs, EAs and CPAs are and what they do.

His follow-up column was also instructive:

Selecting a tax professional? It's OK to be picky

[...] So, where to start looking for a tax pro? Ask a friend or someone whose judgment you trust whom he uses. If you shop around, interview more than one in person. You'll get a better feel for pedigree, fees, specialties and personality.

"Some tax pros are not great communicators," said Joseph Anthony, a licensed tax consultant with Joseph Anthony & Associates Inc. in Portland. "You should know going in what you should expect from your tax pro." [...]

It goes on to offer advice, including questions you should ask.

     

My Brilliant Career. Partime. Maybe.

Well anyway, I'm thinking about it:



I took an online aptitude test, and scored 100%. It seemed mostly to be testing if I was actually paying attention. Not too hard to do.
     

If Candies Were Taxes...

From the Mouths of Babes:



H.T. Happy Redistributionist Halloween!      

Is the Tea Party's approach to debt flawed?

At first I assumed that this article was just another hit piece against the Tea Party. But I think it's more subtle, and on reading it, I think it does bring up some interesting points:

National debt: Where the Tea Party is wrong

NEW YORK (CNNMoney) -- First, let's give the Tea Party props for thinking critically about how much money the government should spend -- energizing the debate about the national debt.

Now for the fact check: Some of the Tea Party arguments for how to address deficits are just plain misguided.

Here are four assertions Tea Partiers make that don't pass the sniff test.

1. To kill debt, cut spending but don't raise taxes: A staple Tea Party promise is to cut spending and keep taxes low.

"[Americans] want spending cuts now, not in ten years. They don't want more job-killing tax increases," Rep. Joe Walsh of Illinois said in a recent statement.

Walsh went on to say that the $100 billion in spending cuts that many in the House GOP wanted to make over the next seven months "is what tackling the deficit looks like."

Not quite.

For starters, the cuts proposed by the House GOP primarily hit non-defense discretionary programs, which make up less than 15% of the total budget

Budget experts on the left and right say successful debt reduction can only occur when spending is cut across all areas of the budget.

And excluding revenue increases from the mix is the equivalent of one hand clapping: ineffective given the size of the country's debt.

Ronald Reagan, often revered as the king of small government and low taxes, signed into law some of the biggest tax cuts in modern history. But Reagan also approved some of the biggest tax increases, too. And he did so to help reduce swelling deficits.

Reagan raised more revenue not by raising tax rates but by making it harder to evade taxes and by reducing the number of tax breaks on the books. [...]

Read the whole thing, which contains embedded links and a video too.

I could nit-pik some things, but there are some relevant points made. Because we already are in debt, we have to manage the existing debt, while simultaneously trying to reduce it. So many things are interconnected, if you suddenly cut off some things, there will be chain reactions in other areas. It's almost like we have to back our way out of some things, before we can start cutting them.

Just as it took time to get this messed up, it's going to take some time to get out. But thrashing about wildly could be just as bad as paralysis. We need to find that middle path that works, with minimal time wasted and optimal damage control. It may mean some compromises for an interim period. I pray that Congress is up to the task. They must be.

I think this would be the best approach for Congress to follow:

Budget cutting, the REASONable way

It's workable, and makes sense in so many ways.
     

Best option to avoid a massive federal bailout

Sounds good to me:


Give States a Way to Go Bankrupt

[...] In the decades since the constitutionality of municipal bankruptcy was affirmed by the Supreme Court, the most serious obstacle in practice has been the rule that only insolvent municipalities can file for bankruptcy. Because a struggling city theoretically can raise taxes or slash programs, it often isn’t clear if even the most bedraggled city needs to be in bankruptcy. In 1991, a court concluded that Bridgeport, Connecticut—which wasn’t anyone’s idea of a healthy city—had not demonstrated that it was insolvent, and rejected Bridgeport’s bankruptcy filing. To avoid this risk, without making bankruptcy too easy for states, Congress would do well to consider a somewhat softer entrance requirement if it enacts bankruptcy-for-states legislation. Current corporate bankruptcy does not require a showing of insolvency, and the new financial reforms allow regulators to take over large banks that are “in default or in danger of default.” Although these reforms are in other ways deeply flawed, the “in default or danger of default” standard would work well for states.

Given that a new bankruptcy chapter for states would clearly be constitutional, and the entrance hurdles could easily be adjusted, the ultimate question is whether its benefits would be great enough to justify the innovation. They would, although a bankruptcy chapter for states would not be nearly so smooth as an ordinary corporate reorganization. When a business files for bankruptcy, the threat to liquidate the company’s assets—that is, to simply sell everything in pieces and shut the business down—has the same effect on creditors that Samuel Johnson attributed to the hangman’s noose: It concentrates the mind wonderfully. Because creditors are likely to be worse off if the company is simply liquidated, they tend to be more flexible, and more willing to renegotiate what they are owed.

One can imagine something like a liquidation sale for cities and even states. Indeed, in the early 1990s, professors Michael McConnell and Randal Picker proposed that Congress amend the existing municipal bankruptcy chapter to allow just that. They argued that many of a city’s commercial, nongovernmental properties could be sold in a municipal bankruptcy, and the proceeds simply distributed to creditors. (They also suggested that municipal boundaries could be dissolved, with a bankrupt city being absorbed by the surrounding county.) Although California has taken small steps in this direction on its own—it recently contracted to sell the San Francisco Civic Center and other public buildings to a Texas investment company for $2.33 billion—it seems unlikely that Congress would give bankruptcy judges the power to compel sales in bankruptcy. Nor could it do so with respect to any property that serves a public purpose. Liquidation simply isn’t a realistic option for a city or state. (The same limitation applies to nation-states like Ireland and Greece, whose financial travails have reinvigorated debate about whether there should be a bankruptcy-like international framework for countries.)

With liquidation off the table, the effectiveness of state bankruptcy would depend a great deal on the state’s willingness to play hardball with its creditors. The principal candidates for restructuring in states like California or Illinois are the state’s bonds and its contracts with public employees. Ideally, bondholders would vote to approve a restructuring. But if they dug in their heels and resisted proposals to restructure their debt, a bankruptcy chapter for states should allow (as municipal bankruptcy already does) for a proposal to be “crammed down” over their objections under certain circumstances. This eliminates the hold-out problem—the refusal of a minority of bondholders to agree to the terms of a restructuring—that can foil efforts to restructure outside of bankruptcy.

The bankruptcy law should give debtor states even more power to rewrite union contracts, if the court approves. Interestingly, it is easier to renegotiate a burdensome union contract in municipal bankruptcy than in a corporate bankruptcy. Vallejo has used this power in its bankruptcy case, which was filed in 2008. It is possible that a state could even renegotiate existing pension benefits in bankruptcy, although this is much less clear and less likely than the power to renegotiate an ongoing contract.

Whether states like California or Illinois would fully take advantage of such powers is of course open to question. During his recent campaign, Governor-elect Jerry Brown promised to take a hard look at California’s out-of-control pension costs. But it is difficult to imagine Brown taking a tough stance with the unions. Even in his reincarnation as a sensible politician who has left his Governor Moonbeam days behind, Brown depends heavily on labor support. He doesn’t seem likely to bring the gravy train to an end, or even to slow it down much.

But as Voltaire warned, we mustn’t make the perfect the enemy of the good. The risk that politicians won’t make as much use of their bankruptcy options as they should does not mean that bankruptcy is a bad idea. For all its limitations, it would give a resolute state a new, more effective tool for paring down the state’s debts. And many a governor might find alluring the possibility of shifting blame for a new frugality onto a bankruptcy court that “made him do it” rather than take direct responsibility for tough choices.

This brings us back to the issue of federal bailouts. When taxpayer-funded bailouts are inserted into the equation, the case for a new bankruptcy chapter becomes overwhelming. And it’s a case for Congress to move now on the creation of a state bankruptcy law.

With the presidential election just two years away, the pressure to bail out California, Illinois, and perhaps other states is about to become irresistible. As we learned in 2008 and 2009, it is impossible to stop a bailout once the government decides to go this route. [...]

I think we NEED a state bankruptcy law. I don't see another viable alternative. Bailouts just increase debt without solving the problem.

It was hard to chose excerpts, it's worth reading the whole article. There are many examples given that back up what is being said.


Also see:

Government Employee Unions are Ruining Us
     

Welfare: When Less is More?

I found this headline hard to believe, until I read the text:

In Entitlement America, The Head Of A Household Of Four Making Minimum Wage Has More Disposable Income Than A Family Making $60,000 A Year

Follow the link. See the charts. Do the math. It's obscene. It's THEFT.
     

Renewal of Tax Cuts: What's at stake

How Congress' tax-cut decision may affect economy

On this, economists agree: Extending tax cuts passed under President George W. Bush for low- and middle-income people would strengthen the weak economy.

The question is what to do about the highest-paid 3 percent of taxpayers. Should Congress let their tax cuts expire at year's end as scheduled? Extend them for only a while? Or make them permanent?

It isn't just a debate over how much money high-income Americans should get to keep. It's about how much their tax cuts might aid the economy. And how much they'll affect the budget deficit years from now.

But first, consider what would happen next year if Congress let the tax cuts for everyone expire as scheduled. According to Moody's Analytics, the deficit would drop to $732 billion. That's well below the $1.3 trillion deficit for the budget year that ended Sept. 30.

At the same time, the economy would suffer, Moody's says: Growth would tail off to just 0.9 percent next year. That's scarcely more than a recessionary pace. And unemployment would average 10.7 percent next year.

That's because higher taxes would leave people with less money to spend. Businesses would be less inclined to hire. Economic growth would slide. Yet if Democrats and Republicans can't reach a deal during the post-election lame-duck session that began this month, taxes will rise across the board in January.

Republicans triumphant in the midterm elections insist that everyone, regardless of income, should continue to enjoy the tax cuts approved during George W. Bush's presidency. [...]

It goes on to give three options that could play out, and their probable consequences. It's a short but informative article, well worth the read.

Then there's this:

Thus Does the Economy Grow

[...] Here, then, are ten practical tips for elected Republican officials, who are torn between trying to govern as a majority party and trying to oppose President Obama’s agenda as a minority party.

[...]

Six. Don’t delink income-tax rates. The strategy we developed in 2001 and 2003 worked. Forced by reconciliation rules to sunset the tax cuts, we set them all to expire on the same day. President Bush reframed the top income-tax rates as small-business tax rates. This argument won the day in 2003 and 2010 and will win again as long as the expiration dates remain synchronized. Don’t fall for the trap of temporarily extending the top rates and permanently extending the others. This would guarantee future increases in the top rates.

Seven. Offer to help the president expand free trade and open investment. Rebuild the center-right free-trade coalition. The president will need to deliver a few Democrats to offset the protectionist Republicans (darn them). You can fight economic isolationism, raise American standards of living, help American allies in Latin America and Asia, cooperate with the president, and split congressional Democrats. That’s a five-part win.

[...]

Read all ten, they're good.
     

California Sinks, as Texas Rises

Financially speaking, that is:

California Suggests Suicide; Texas Asks: Can I Lend You a Knife?

In the future, historians may likely mark the 2010 midterm elections as the end of the California era and the beginning of the Texas one. In one stunning stroke, amid a national conservative tide, California voters essentially ratified a political and regulatory regime that has left much of the state unemployed and many others looking for the exits.

California has drifted far away from the place that John Gunther described in 1946 as “the most spectacular and most diversified American state … so ripe, golden.” Instead of a role model, California has become a cautionary tale of mismanagement of what by all rights should be the country’s most prosperous big state. Its poverty rate is at least two points above the national average; its unemployment rate nearly three points above the national average. On Friday Gov. Arnold Schwarzenegger was forced yet again to call an emergency session in order to deal with the state’s enormous budget problems.

This state of crisis is likely to become the norm for the Golden State. In contrast to other hard-hit states like Pennsylvania, Ohio and Nevada, which all opted for pro-business, fiscally responsible candidates, California voters decisively handed virtually total power to a motley coalition of Democratic-machine politicians, public employee unions, green activists and rent-seeking special interests.

In the new year, the once and again Gov. Jerry Brown, who has some conservative fiscal instincts, will be hard-pressed to convince Democratic legislators who get much of their funding from public-sector unions to trim spending. Perhaps more troubling, Brown’s own extremism on climate change policy–backed by rent-seeking Silicon Valley investors with big bets on renewable fuels–virtually assures a further tightening of a regulatory regime that will slow an economic recovery in every industry from manufacturing and agriculture to home-building.


Texas’ trajectory, however, looks quite the opposite.[...]

Read the whole thing and see how. Count the many, many ways. See how bad things have gotten in California. Even I was shocked.

Texas is the living contrast, showing that there IS a way out for California, if they will take it. If not... NO BAILOUTS. Let them go bankrupt, and
dissolve their government employee unions. Some people need to learn the hard way, that you can't spend money you don't have.
     

What the 1930's can teach us about NOW

Guess Who?

Guess who said the following: "We have tried spending money. We are spending more than we have ever spent before and it does not work." Was it Sarah Palin? Rush Limbaugh? Karl Rove?

Not even close. It was Henry Morgenthau, Secretary of the Treasury under Franklin D. Roosevelt and one of FDR's closest advisers. He added, "after eight years of this Administration we have just as much unemployment as when we started. . . And an enormous debt to boot!"

This is just one of the remarkable and eye-opening facts in a must-read book titled "New Deal or Raw Deal?" by Professor Burton W. Folsom, Jr., of Hillsdale College.

Ordinarily, what happened in the 1930s might be something to be left for historians to be concerned about. But the very same kinds of policies that were tried-- and failed-- during the 1930s are being carried out in Washington today, with the advocates of such policies often invoking FDR's New Deal as a model.

Franklin D. Roosevelt blamed the country's woes on the problems he inherited from his predecessor, much as Barack Obama does today. But unemployment was 20 percent in the spring of 1939, six long years after Herbert Hoover had left the White House. [...]

Read the rest to see why, and how we must avoid having history repeat itself. Roosevelt wasn't even following pure Keynesian economics, he was following an obscure economist at the University of Wisconsin, whom most other economists disagreed with. Roosevelt knew little about economics, but a great deal about politics. The combination was devastating.

Another contemporary economist, Amity Shlaes, takes a look at the 1930's:

The Rules of the Game and Economic Recovery

THE MONOPOLY BOARD GAME originated during the Great Depression. At first its inventor, Charles Darrow, could not interest manufacturers. Parker Brothers turned the game down, citing “52 design errors.” But Darrow produced his own copies of the game, and Parker Brothers finally bought Monopoly. By 1935, the New York Times was reporting that “leading all other board games … is the season’s craze, ‘Monopoly,’ the game of real estate.”

Most of us are familiar with the object of Monopoly: the accumulation of property on which one places houses and hotels, and from which one receives revenue. Many of us have a favorite token. Perennially popular is the top hat, which symbolizes the sort of wealth to which Americans who work hard can aspire. The top hat is a token that has remained in the game, even while others have changed over the decades.

One’s willingness to play Monopoly depends on a few conditions—for instance, a predictable number of “Pay Income Tax” cards. These cards are manageable when you know in advance the amount of money printed on them and how many of them are in the deck. It helps, too, that there are a limited and predictable number of “Go to Jail” cards. This is what Frank Knight of the University of Chicago would call a knowable risk, as opposed to an uncertainty. Likewise, there must be a limited and predictable number of “Chance” cards. In other words, there has to be some certainty that property rights are secure and that the risks to property are few in number and can be managed.

The bank must be dependable, too. There is a fixed supply of Monopoly money and the bank is supposed to follow the rules of the game, exercising little or no independent discretion. If players sit down at the Monopoly board only to discover a bank that overreaches or is too unpredictable or discretionary, we all know what happens. They will walk away from the board. There is no game. [...]

She then explains the relevance of the Monopoly analogy to the 1930's. She goes into detail, using specific events to illustrate her premises.

I've often heard that government interference and intervention at the time actually prolonged the depression by eroding confidence and creating instability. Here, Shlaes offers the damning evidence for all to see. After explaining in detail, looking at causes and effects, she then demonstrates their relevance to the events of our times:

[...] It is not hard to see some of today’s troubles as a repeat of the errors of the 1930s. There is arrogance up top. The federal government is dilettantish with money and exhibits disregard and even hostility to all other players. It is only as a result of this that economic recovery seems out of reach.

The key to recovery, now as in the 1930s, is to be found in property rights. These rights suffer under our current politics in several ways. The mortgage crisis, for example, arose out of a long-standing erosion of the property rights concept—first on the part of Fannie Mae and Freddie Mac, but also on that of the Federal Reserve. Broadening FDR’s entitlement theories, Congress taught the country that home ownership was a “right.” This fostered a misunderstanding of what property is. The owners didn’t realize what ownership entailed—that is, they didn’t grasp that they were obligated to deliver on the terms of the contract of their mortgage. In the bipartisan enthusiasm for making everyone an owner, our government debased the concept of home ownership.

Property rights are endangered as well by the ongoing assault on contracts generally. A perfect example of this was the treatment of Chrysler bonds during the company’s bankruptcy, where senior secured creditors were ignored, notwithstanding the status of their bonds under bankruptcy law. The current administration made a political decision to subordinate those contracts to union demands. That sent a dangerous signal for the future that U.S. bonds are not trustworthy.

Three other threats to property loom. One is tax increases, such as the coming expiration of the Bush tax cuts. More taxes mean less private property. A second threat is in the area of infrastructure. Stimulus plans tend to emphasize infrastructure—especially roads and railroads. And after the Supreme Court’s Kelo decision of 2005, the federal government will have enormous license to use eminent domain to claim private property for these purposes. Third and finally, there is the worst kind of confiscation of private property: inflation, which excessive government spending necessarily encourages. Many of us sense that inflation is closer than the country thinks.

If the experience of the Great Depression teaches anything, it is that property rights must be firmly established or else we will not have the kind of economic activity that leads to strong recovery. The Monopoly board game reminds us that economic growth isn’t mysterious and inscrutable. Economic growth depends on the impulse of the small businessman and entrepreneur to get back in the game. In order for this to happen, we don’t need a perfect government. All we need is one that is “not too bad,” whose rules are not constantly changing and snuffing out the willingness of these players to take risks. We need a government under which the money supply doesn’t change unpredictably, there are not too many “Go to Jail” cards, and the top hats are confident in the possibility of seeing significant returns on investment. [...]

It's definitely worth reading the whole thing. If you don't have the time to buy and read here book, this lecture she gave is the next best thing.
     

Whose money is it anyway? Who EARNED it?

Is the money you earn yours, or the governments?



All or nothing: Stop the Obama tax increases

I’m going to keep repeating it until they stop saying it.

Republicans, you are not fighting for the extension of the “Bush tax cuts.”

You are fighting to STOP THE OBAMA TAX INCREASES.

All of them.

As I noted on Friday, when voters got the chance to soak the rich in Washington state, they overwhelmingly rejected onerous, punitive taxes to redistribute wealth from private job creators and future private job creators to government schools and government health care programs.

[...]

Our fiscal conservative leaders in Washington must forcefully challenge the redistributor-in-chief’s idea that allowing taxpayers to keep money that is theirs to begin with is a government “spend.”

We sent fresh blood to D.C. to stand up for those who have been targeted ruthlessly by Obama’s war on wealth, jobs, and prosperity.

Stop the Obama tax increases. All or nothing. We’ve been punished enough.

Yes, punished enough by Democrats, and Republicans too. This time around, the Republicans better remember to "dance with the one that brung them" to the dance.
     

"shipping jobs overseas" argument is flawed

See the logic. Do the math:

Shipping out jobs
A myth pols find convenient

With campaign season comes predictable charges that Candidate X favors "tax breaks for corporations that ship US jobs overseas." It's a bogus claim.

With unemployment still stubbornly high, Americans are rightly worried about the economy. And politicians of both parties -- from President Obama on down -- have seized on US multinational companies as a convenient scapegoat.

The charge sounds logical: Under the US corporate tax code, US-based companies aren't taxed on profits that their affiliates abroad earn until those profits are returned here. Supposedly, this "tax break" gives firms an incentive to create jobs overseas rather than at home, so any candidate who doesn't want to impose higher taxes on those foreign operations is guilty of "shipping jobs overseas."

In fact, American companies have quite valid reasons beyond any tax advantage to establish overseas affiliates: That's how they reach foreign customers with US-branded goods and services.

Those affiliates allow US companies to sell services that can only be delivered where the customer lives (such as fast food and retail) or to customize their products, such as automobiles, to better reflect the taste of customers in foreign markets.

In 2008, US companies sold more than $6 trillion worth of goods and services through overseas affiliates -- three times what US companies exported from America. And, no, those affiliates aren't mainly "export platforms," set up to ship goods back to the United States: Almost 90 percent of what they produce abroad is sold abroad.

It's not about access to "cheap labor," either: More than three-quarters of outward US manufacturing investment goes to other rich, developed economies like Canada and the European Union. That's where they find the wealthy customers, skilled workers, open markets, efficient infrastructure and political stability to operate profitably.

Indeed, US manufacturing companies invest a modest $2 billion a year in China, compared to $30 billion a year in Europe.

Nor do jobs created by those investments come at the expense of American workers. In fact, the more workers US multinationals hire abroad, the more they tend to hire at their parent operations in America. Ramped up production at affiliates stimulates demand at home for managers, accountants, engineers and sales reps. It also stokes demand for the export of higher-end components and services from the US-based parent.

But the charge is worse yet -- because if Congress were to repeal the tax exemption for income earned abroad, it would kill American jobs. [...]

Read the rest and see how. The truth matters.
     

How to silence your critics: A tax on bloggers?

Yes. In Philadelpha, it's happening:

Philadelphia tax fever: Bloggers get hit

The Founding Fathers must be rolling in their graves. In Philadelphia, home of the Liberty Bell and Independence Hall, the city government has proposed smacking bloggers — our generation’s pamphleteers — with a $300 business tax. Yes, they are now requiring a license for Internet activists and hobbyists to exercise their free speech. [...]

Read the whole thing. They want to require blogs to have a business license, whether they make money or not, because blogs have the potential to make money, if they offer advertising.

Whatever happened to "free speech"? Remember free speech? The 1st Amendment? Is it soon to be nothing more than a relic of the past?


Also see:

Marxist Censorship Dreams, and the FCC

How much longer will our Republic last?
     

Nearly ALL of our budget deficits come not from reduced tax revenues, but from spending increases

WHERE DO PEOPLE LIKE THIS COME FROM?

[...] One liberal writes that "the government actually ran a surplus during the Clinton administration's last few years, and it was former President George W. Bush's wars and tax cuts for the rich that turned our federal budget into the red." This is typical liberal thinking based more on an intense dislike of George Bush - possibly born of bitterness over the 2000 election - than on economic facts. The writer ignores the fact that tax revenues actually increased after the Bush tax cuts. Tax revenues were then and remain now above historical averages - even after the tax cuts. The Heritage Foundation has published studies showing that nearly ALL of our budget deficits come not from reduced tax revenues ... but from spending increases; both from George W. Bush and Barack Obama. It's the spending - not the tax cuts - that have brought us our immense debt. But you don't want to confuse this letter writer with those facts. [...]

But it's a fact that bears repeating. When the tax cuts are allowed to expire, what do you think will happen to tax revenue? We are about to see:

What happens when Tax Cuts Expire in 2011?

Those who don't learn from the mistakes of the past, are doomed to keep repeating them.