Yearly Archives: 2010

Cooperation! What Is It Good For?

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There was a responsibility of government that I think the Republicans . . . began to understand . . . a little bit more in this lame-duck session than they had in the previous, quite frankly, 18 months or so . . .

- Sec. Robert Gibbs

Inconceivable. You keep using that word. I do not think it means, what you think it means.

- Inigo Montoya from The Princess Bride
 

The Dems have lost one of the three pillars of legislative power, and already they are blaming the GOP for indescript future disasters. The Old Time Media is already churning the narrative that the GOP must cooperate and compromise with Pres. Obama and the Dems or else the government will shut down and the economy will collapse. As in The
Princess Bride, compromise does not mean what the OTM think it means.

As any purple dinosaur fan knows, compromise means softening parties’ positions so that they can cooperate and prosper more than if they had not compromised. People compromise every day – Starbucks would like to charge $5 for a latte, while consumers would like to pay $1 for milk and coffee in a cup. They compromise at about $3.50 so that consumers get their coffee and Starbucks earns a living, and both parties end up better off. Compromise is based on reason; it is voluntary; it is beneficial to all parties.

Congress is fresh off ramming through a host of illegal and un-American laws designed to advance a radical socialist agenda and turn the US into a European-style collective. With a supermajority in the Senate, the Dems never asked for GOP compromise when it came to its multiple stimulus acts, union bailouts, the illegal confiscation of private capital, socialized medicine, or abusive financial regulation. Now that just one lever of power has changed hands, lefties in the OTM are decrying GOP obstructionism and calling for compromise.

Compromise to Obama and Sen. Reid means continuing the pursuit of socialism, but at a slower pace. GOP or Dem, Washington has always advanced the cause of greater government control over people’s lives, with the GOP sometimes moving at a slightly slower pace. If the new GOP House truly wants less government, then compromise should be with regard to how many of Obama’s policies should be reversed, not how many more should be enacted.

The OTM and Dems want compromise to what end? In the real world, compromise would mean deciding how to spend a limited amount of tax revenues on essential government functions. Washington-style compromise means giving everything to everyone (e.g. Dems want more spending and regulation, and the GOP wants to extend tax cuts, so why not do both?). The disastrous result of Washington-style compromise is a mountain of targeted favors, regulations that limit prosperity for everyone, and projected entitlement liabilities that can never be paid. Compromise where the taxpayers are not at the table has been a disaster.

If the GOP truly wants to be different from their corrupt Bush era predecessors they must reject the siren song of compromise. Any amount of funding to implement Obamacare is the end of decent health care in the US. Any EPA funding that allows for CO2 regulation is the end of industry and manufacturing in the US. Any continuation of Social Security and Medicaid as they are is the death of the US’s AAA credit rating and its ability to service its debt. Compromise with the taxpayer in mind means deciding how quickly to repeal everything Obama has done, not how quickly to continue it.

Even before the 112th Congress takes power, the Dems and the OTM are fighting for the moral high ground based on a deceptive presentation of compromise and cooperation. The Dems are so in the grip of radical socialism that they are beyond any understanding that the old Washington ways have left the US on the brink of ruin. Savvy voters should ask whether the GOP can ever maintain the backbone to refuse compromise and fight to save the US’s future.

How Can The Mortgage Deduction Be Wrong?

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A handful of politicians both left and right, recently floated test balloons on eliminating the mortgage interest deduction in exchange for a more generous standard deduction or a lowering of marginal rates. Special interest groups like the National Association of Realtors and the National Association of Home Builders are howling that the mortgage deduction is a pillar of home ownership and the US economy in general. On the contrary, the mortgage deduction is a harmful manipulation of the free market, and its elimination would stabilize tax revenues while preventing further housing bubbles.

Most people cherish their mortgage deductions; after all, their taxes are high enough already. The proposals, from Steve Forbes’s flat tax to Pres. Obama’s Commission on Fiscal Responsibility and Reform are more complex and might actually lower the middle class tax burden. In short, the mortgage deduction would be eliminated in exchange for an overall lower income tax rate. People with modest debt loads relative to their income would see taxes fall, while heavy borrowers might face trouble.

By encouraging borrowing, the mortgage deduction perverts the economy in several ways. First, since Uncle Sam pays about 30% of a homeowner’s interest expense, people are encouraged to borrow as much as they can. Likewise, since mortgages are artificially cheap, people are encouraged to buy as much house as possible. These incentives are the formula for a speculative bubble in housing. Combined with loose credit care of government backed mortgage securities (i.e. Fannie Mae), the 2008 housing collapse was inevitable.

On the government’s side, high marginal rates combined with targeted deductions create a boom and bust cycle for tax receipts. By placing about half of the tax burden on the top 5% of earners, federal revenues are highly variable. California, whose taxes are even more targeted, is the best example of the ruin caused by overly progressive income taxes – whenever the economy dips, California’s tax revenues collapse. Most economists agree that a broad and transparent tax policy is the best way to fund the government, yet higher tax rates combined with targeted deductions remains Washington’s policy.

Finally, higher tax rates combined with targeted deductions encourage Beltway corruption. The availability of targeted tax favors encourages the investment in lobbying and PACs. While NAR and NAHB‘s lobbying hardly compares to AARP’s, they do force their members to donate to politicians in the hope of influencing the tax code. If the individual tax return were completed on a post card as Steve Forbes proposed, there would be little opportunity for Washington’s tax lobbyists and the economic drag they impose.

Would eliminating the mortgage deduction deny home ownership to Americans? Not likely. Already, the housing collapse has limited financing to those who can afford it, the very people who would likely feel little pain from the adjustment. Other home financing tools, like REX Agreements could fill in any gap left by smaller mortgages. Eliminating the mortgage deduction might reduce the number of ‘McMansions’ built for aggressive borrowers, but the trend away from overbuilding started with the collapse. People will still need homes, but they will not be coerced into over buying and over borrowing if the mortgage deduction is eliminated – hardly the end of Realtors and homebuilders.

Of course taking from the many to benefit the few is Washington’s staple business, so the mortgage deduction is probably secure. Still, if the US has any hope of constraining its government and saving its future, proposals like eliminating the mortgage deduction must be on the table. The pleasant surprise that the President’s Commission was willing to confront the culture of corruption that surrounds the tax code is a ray of hope for the US’s future.

What’s Wrong With John Lennon?

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The media mourned the 30th anniversary of John Lennon’s murder this week. Nobody should be murdered, of course, but why was Lennon raised above the other 2,227 New Yorkers murdered that year? Why is Lennon still held as a god among the cognoscenti with his own Central Park monument? It is well past time to reestablish Lennon as a wholly flawed man who is not a suitable role model for the communist paradise he represents in death.

Lennon was a talented songwriter who got his start by ripping off Carl Perkins. He took Learyesque quantities of drugs and moved the Beatles to write disjointed snippets that producer George Martin cobbled into songs which similarly addled baby boomers took as life lessons. Lennon found the talentless Yoko Ono irresistible, left his first wife and son with essentially nothing, and went on to become a counter-culture crusader. With Ono, Lennon went off the artistic and drug abuse deep end, fading into popular obscurity. Craving his lost fame, he released a pop album in 1980, and was sadly murdered about a month later.

Lennon’s signature song Imagine is a plea to imagine a world without every blessing and advancement know to civilization. No God; no property rights; no disagreement with the commune; no planning for a better future; no individual pursuits of any kind; and Lennon meant it from his West Side high-rise. Lennon, who was famous for ‘lost’ periods of extreme drug abuse, hardly would have lasted under the Stalinist paradise for which he pined.

Later in his life Lennon was more famous for anti-war and anti-capitalist protests than his music, so his assassination is the key to his enduring fame. George Harrison and Paul McCartney put out more and better post Beatles music than did Lennon, but Lennon was the martyred icon for the left. Likewise, Lennon’s pop culture status allowed the Old Time Media to maintain a leftist subtext to its perennial coverage of the late Liverpudlian. By taking the very hard edge off the reality of Lennon, the socialist movement created a sympathetic face. It is almost impolitic to question what Lennon stood for, which is death and poverty.

By allowing Lennon to remain an earthly god, socialism is given a powerful sword. Lennon was no visionary; he was an isolated unstable pop star with no real world credibility. Lennon should be viewed as a rich eccentric goofball who thought everyone else did not need money, not as the pied piper of socialism.