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The views expressed by Andrew Quinlan and Dan Mitchell on this weblog are solely their own and are not necessarily those of their employers, The Center for Freedom and Prosperity Foundation and The Cato Institute, respectively. |
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The Market Center Blog |
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Observations and insights on the global fight |
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CF&P's Market Center Blog Archives |
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Sunday, January 31, 2010 ~ 3:55 p.m, Dan Mitchell Wrote: Nearly three out of four Americans think that at least half of the money spent in the federal stimulus plan has been wasted, according to a new national poll. A CNN/Opinion Research Corporation survey released
Monday morning also indicates that 63 percent of the public thinks that projects in the plan were included for purely political reasons... the program, formally known as the American Recovery and Reinvestment
Act of 2009, attempts to stimulate the country's economy...at a total cost to the government of $787 billion. But it gets worse. According to the new CBO budget numbers, Obama's boondoggle proposal actually will cost $75 billion more than he said last year (typical mistake with government budgeting, yet we're somehow supposed to believe his fatuous claims that a giant new healthcare entitlement will reduce the deficit). By the way, this doesn't count the added interest on the debt from all this new spending, so the actual cost of the so-called stimulus is more than $1 trillion - and rising. And as this AP story notes, there's more bad news since the Senate is crafting a second "stimulus" to waste another $82.5 billion: Last year's $787 billion economic stimulus bill is going to be even more expensive — $75 billion more. The new Congressional Budget Office estimate, released Tuesday, provides more ammunition for Republicans
who say the stimulus has been long on spending and short on creating promised jobs. ...Democrats are pressing for another stimulus measure and top Senate Democrats have drafted an $82.5 billion jobs plan that
would help small businesses, boost spending on road construction and mass transit, and give local governments money to retain teachers. Saturday, January 30, 2010 ~ 6:23 p.m, Dan Mitchell Wrote: Consider that from Jan. 20, 2001, to Jan. 20, 2009, the debt held by the public grew $3 trillion under Mr. Bush—to $6.3 trillion from $3.3 trillion at
a time when the national economy grew as well. By comparison, from the day Mr. Obama took office last year to the end of the current fiscal year,
according to the Office of Management and Budget, the debt held by the public will grow by $3.3 trillion. In 20 months, Mr. Obama will add as much
debt as Mr. Bush ran up in eight years. ...Mr. Bush's deficits ran an average of 3.2% of GDP, slightly above the post World War II average of 2.7%. Mr.
Obama's plan calls for deficits that will average 4.2% over the next decade. Team Obama has been on history's biggest spending spree, which has
included a $787 billion stimulus, a $30 billion expansion of a child health-care program, and a $410 billion federal spending bill that increased
nondefense discretionary spending 10% for the last half of fiscal year 2009. Mr. Obama also hiked nondefense discretionary spending another 12% for fiscal year 2010. Correction: In an earlier post on one of Rove's columns (http://www.freedomandprosperity.org/blog/2010-01/2010-01.shtml#141), I incorrectly claimed that Bush never vetoed a bill because it spent too much.That was wrong. He did veto a handful of bills once Democrats took control of Congress. Friday, January 29, 2010 ~ 2:59 p.m, Dan Mitchell Wrote: The White House said yesterday it has damped down a political revolt against Ben Bernanke and now has the votes to secure the Federal Reserve Chairman's second four-year term. Whether or not Mr. Bernanke is
confirmed, the lesson we draw is that overly political central bankers will eventually be undone by politics. ...When we opposed Mr. Bernanke's
reconfirmation on December 3, the facile consensus was that the Fed chief was a master of the universe who had saved the world from depression. But
after Scott Brown's victory in Massachusetts last week, Senate Democrats are suddenly looking for a financial political sacrifice. ...The Democrats'
loudest complaint, moreover, is that Mr. Bernanke and the Fed haven't been easy enough in printing money. ...The Fed has already kept interest rates at
near zero for more than a year, and it is buying $1.25 trillion in mortgage-backed securities to refloat the housing bubble, among other
interventions into fiscal policy and credit allocation. Is the Fed going to buy another $1.25 trillion, or promise to keep rates at zero for another 14
months? Mr. Reid's declaration of a confirmation quid pro quo will not reassure global investors who already fear that the Fed lacks the political
will to withdraw its historic post-crisis liquidity binge soon enough to avoid new asset bubbles. ...Mr. Bernanke is already far too susceptible to political
pressure. As a Fed governor, he was Alan Greenspan's intellectual co-pilot last decade when their easy money policies created the housing mania.
When Congress later put political pressure on the Fed to direct credit toward housing, and even to student loans, Mr. Bernanke (who was then
chairman) also quickly obliged. More ominously for the next four years, Mr. Bernanke continues to deny any Fed monetary culpability for creating the
mania. Shortly after the New Year, even with his nomination pending, Mr. Bernanke issued an apologia that was striking for its willingness to play to
the Congressional theory of the meltdown by blaming bankers and lax regulators. ...Yes, much of Wall Street wants to see Mr. Bernanke confirmed.
The Street is currently making a bundle off Fed policy, as it borrows at near-zero rates and lends long, and the banks don't want that to end. The
banks also loved negative real interest rates in the middle of the last decade, and we know how that turned out. Thursday, January 28, 2010 ~ 11:44 a.m, Dan Mitchell Wrote: ...when it comes to unsubstantiated research it's hard to beat the IPCC, whose 2007 report insisted that the glaciers—which feed the rivers that in
turn feed much of South Asia—were very likely to nearly disappear by the year 2035. "The receding and thinning of Himalayan glaciers," it wrote in
its supposedly definitive report, "can be attributed primarily to the [sic] global warming due to increase in anthropogenic emission of greenhouse
gases." It turns out that this widely publicized prediction was taken from a 2005 report from the World Wildlife Fund, which based it on a comment by
Indian glacier expert Syed Hasnain from 1999. Mr. Hasnian now says he was "misquoted." Even more interesting is that the IPCC was warned in
2006 by leading glaciologist Georg Kaser that the 2035 forecast was baseless. ...Mr. Kaser told the Agence France-Presse. "It is so wrong that it is not even worth discussing." Then we have the revelation that the Chairman of the IPCC used (and almost certainly was aware that he was using) totally dishonest assertions to fleece donors - including gullible American foundations and oppressed European taxpayers. Chairman Pachauri already has been appropriate mocked for his giant "carbon footprint" due to his globe trotting (in first class, of course). Now he's catching some much-deserved flak for lining his pockets while pimping for the IPCC hucksters: The chairman of the UN's Intergovernmental Panel on Climate Change (IPCC), has used bogus claims that Himalayan glaciers were melting to win
grants worth hundreds of thousands of pounds. Rajendra Pachauri's Energy and Resources Institute (TERI), based in New Delhi, was awarded up to
£310,000 by the Carnegie Corporation of New York and the lion's share of a £2.5m EU grant funded by European taxpayers. It means that EU taxpayers are funding research into a scientific claim about glaciers that
any ice researcher should immediately recognise as bogus. ...In one presentation at last May's launch, Anastasios Kentarchos, of the European
Commission's Climate Change and Environmental Risks Unit, specifically cited the bogus IPCC claims about glacier melt as a reason for pouring EU
taxpayers' money into the project. ...questions remain. One of the most important is in connection with Pachauri's earnings. In an interview with
The Sunday Times he said his only income came from his salary at TERI. However TERI does not publish his salary and he refused to divulge it. In
India questions are also being asked about Pachauri's links with GloriOil, a Houston, Texas-based oil technology company that specialises in recovering
extra oil from declining oil fields . Pachauri is listed as a founder and scientific advisor. But you have to give the guy credit for cojones. An article in the Times of India reports that, "...while his credibility and that of the IPCC has taken a battering, Pachauri maintains his chutzpah in the face of growing skepticism, arguing that his acceptance that the research on glaciers had been dodgy had actually somehow enhanced the credibility of the body." Thursday, January 28, 2010 ~ 11:02 a.m, Dan Mitchell Wrote:
Wednesday, January 27, 2010 ~ 3:33 p.m, Dan Mitchell Wrote: A UBS AG account holder won a Swiss court case preventing data from being disclosed in a ruling that may impede a U.S. crackdown on overseas
tax evasion. The failure by U.S. citizens to complete certain tax forms or declare income doesn't constitute "tax fraud" that would require
Switzerland to disclose account data, the country's Federal Administrative Court ruled in a judgment released today. ..."The prosecutors at the Justice
Department are not going to be happy with this opinion," Namorato said in an interview in Washington. "It guts the settlement that they negotiated
with the Swiss authorities." ...The Swiss government said in a statement that it will decide Jan. 27 how the Swiss-U.S. agreement can be implemented in light of the ruling. U.S. Justice Department spokesman
Charles Miller declined to comment. ...The Internal Revenue Service said in a statement that while the agency hadn't reviewed the ruling it "had every
expectation that the Swiss government will continue to honor the terms of the agreement." ...Today's ruling involved a single test case, and the court
said there were 25 more involving similar claims that it will ask the Swiss tax authority to review. "It's a landmark decision," said Bernhard
Loetscher a partner at Zurich-based law firm CMS von Erlach Henrici AG. "The court considers the case so crystal clear that it invited the SFTA to
withdraw the 25 other claims." ...Under the 1996 double taxation treaty, "tax fraud and the like" means fraudulent behavior that causes or attempts
an illegal and important reduction in tax owed. Examples included keeping separate accounts of incorrect profit, losses and orders, as well as a scheme
of lies. Switzerland distinguishes between tax fraud, which is a crime, and tax evasion, which is a civil offense. "The U.S. will soon start to renegotiate
the double taxation treaty, to give up the distinction between tax evasion and tax fraud," said Zurich lawyer Wolfram Kuoni. "The key battle will be if it will apply retrospectively." This battle is part of a broader effort by uncompetitive nations to persecute "tax havens." Creating a tax cartel for the benefit of greedy politicians in France, Germany, and the United States would be a mistake. An "OPEC for politicians" would pave the way for higher taxes, as explained here, here, and here. But this also is a human rights issue. Look at what happened recently in the thugocracy known as Venezuela, where Chavez began a new wave of expropriation. The Venezuelans with money in Cayman, Miami, and Switzerland were safe, but the people with assets inside the country have been ripped off by a criminal government. Or what about people subjected to persecution, such as political dissidents in Russia? Or Jews in North Africa? Or ethnic Chinese in Indonesia? Or homosexuals in Iran? And how about people in places such as Mexico where kidnappings are common and successful people are targeted, often on the basis of information leaked from tax departments. This world needs safe havens, jurisdictions such as Switzerland and the Cayman Islands that offer oppressed people the protection of honest courts, financial privacy, and the rule of law. Heck, even the bureaucrat in charge of the OECD's anti-tax competition campaign admitted to a British paper that "tax havens are essential for individuals who live in unstable regimes." With politicians making America less stable with each passing day, let's hope this essential freedom is available in the future. Link to CF&P's The Tax Havens Video Trilogy Tax Havens: Myths vs. Facts The Moral Case for Tax Havens The Economic Case for Tax Havens Wednesday, January 27, 2010 ~ 1:22 p.m, Dan Mitchell Wrote: To attack the $1.4 trillion deficit, the White House will propose limits on discretionary spending unrelated to the military, veterans, homeland
security and international affairs, according to senior administration officials. Also untouched are big entitlement programs such as Social
Security and Medicare. The freeze would affect $447 billion in spending, or 17% of the total federal budget, and would likely be overtaken by growth in
the untouched areas of discretionary spending. It's designed to save $250 billion over the coming decade, compared with what would have been spent
had this area been allowed to rise along with inflation. ...administration officials acknowledged the freeze is directed at only a small part of overall
spending, but that fiscal discipline has to start somewhere. President Obama had requested a 7.3% increase last year in the areas he now seeks to freeze. Tuesday, January 26, 2010 ~ 6:34 p.m, Dan Mitchell Wrote: For the first time in American history, a majority of union members are government workers rather than private-sector employees, the Bureau of
Labor Statistics announced on Friday. In its annual report on union membership, the bureau undercut the longstanding notion that union members are overwhelmingly blue-collar factory workers. It found that
membership fell so fast in the private sector in 2009 that the 7.9 million unionized public-sector workers easily outnumbered those in the private
sector, where labor's ranks shrank to 7.4 million, from 8.2 million in 2008. ...According to the labor bureau, 7.2 percent of private-sector workers were
union members last year, down from 7.6 percent the previous year. That, labor historians said, was the lowest percentage of private-sector workers in
unions since 1900. Among government workers, union membership grew to 37.4 percent last year, from 36.8 percent in 2008. ...government employment grew last year, inching up 16,000, to 22,516,000, according to
the bureau. ...Fred Siegel, a visiting professor of history at St. Francis College in Brooklyn and a senior fellow at the Manhattan Institute, a
conservative research organization, said, "There were enormous political ramifications" to the fact that public-sector workers are now the majority
in organized labor. "At the same time the country is being squeezed, public-sector unions are a rising political force in the Democratic Party," he
said. "They depend on extra money for the public sector, and that puts the Democrats in a difficult position. In four big states — New York, New
Jersey, Illinois and California — the public-sector unions have largely been untouched by the economic downturn. In those states, you have an impeding
clash between the public-sector unions and the public at large." Tuesday, January 26, 2010 ~ 11:39 a.m, Dan Mitchell Wrote: One of the things that is long overdue is some Republican re-thinking-- or perhaps thinking for the first time-- about the approach that they have been
using, with consistently disastrous results, for trying to get the black vote. ...There is no point today in Republicans continuing to try to win over the
average black voter by acting like imitation Democrats. Those who like what the Democrats are doing are going to vote for real Democrats. ...[Blacks] want their children to get a decent education, which they are
unlikely to get so long as public schools are a monopoly run for the benefit of the teachers' unions, instead of for the education of the children.
Democrats are totally in hock to the teachers' unions, which means that Republicans have a golden opportunity to go after the votes of black
parents by connecting the dots and exposing one of the key reasons for bad education in inner cities and the bad consequences that follow. But when
have you ever heard a Republican candidate get up and hammer the teachers' unions for blocking every attempt to give parents-- black or
white-- the choice of where to send their children? The teachers' unions are going to be against the Republicans, whether Republicans hammer them or
keep timidly quiet. Why not talk straight to black voters about the dire consequences of the pubic school monopoly that the teachers' unions and
the Democrats protect at all cost, even though many private schools-- notably the KIPP schools in various states-- have achieved remarkable success with low-income and minority youngsters? In his fourth column in the series, Sowell makes the common-sense point that a squishy, moderate message winds up appealing to nobody. That doesn't guarantee a lost election, to be sure. As Bush and Nixon showed, a milquetoast Republican can prevail if facing an incompetent Democrat in the right national climate, but those often turn out to be Pyrrhic victories since they often set the stage for big Democratic victories in the future. As Sowell notes, Reagan is the right model for the GOP: A long-standing battle within the Republican Party, going back at least as far as the 1940s, is between those who want the party to clearly
differentiate itself from the Democrats and those who seek a broader appeal by catering to a wider spectrum of social and ideological groups. The
"smart money" advocates a "big tent" and deplores those who want a clearer adherence to the kinds of ideas espoused by Ronald Reagan. What
the "smart money" fails to explain is how Reagan won two landslide presidential elections in a row. He certainly didn't do it by trying to act like
Democrats. That's how the Republicans later turned off their own supporters, without gaining enough other voters to keep from being wiped
out by the Democrats in two consecutive elections. ...When you try to waffle and be all things to all people, you can end up being nothing to anybody.
That is where the "smart money" crowd have gotten the Republicans in recent years. Monday, January 25, 2010 ~ 9:10 a.m, Dan Mitchell Wrote: After the underwear bomber's attempted mass murder, Americans are losing patience with the airline security system. It is bad enough that our screening
process makes innocent people work far too hard to prove that they are not terrorists. It also manages to make it too easy for actual terrorists to be
treated as innocent. ...The security process needs several things it is lacking. It needs continuous adaptation, with a strong focus on satisfying customers
and improving results. It needs to find new and better methods of meeting the demands of customers who value safety as well as speed and efficiency.
It needs to function in a dynamic environment, disciplined by rigorous competitive pressure. In short, it needs the market. ...Responsibility for the
design and implementation of airline security should be handed back to the private sector. ...A post-9/11 market system would combine the benefits of a
competitive system with the much-stricter federal oversight necessary to ensure a basic standard of travel security. Airlines would select firms to
screen passengers who will fly on their planes. Let's say that it would be up to each airline to contract with at least one security firm at each airport.
The airline would pay the firm a set dollar amount per passenger, and this cost would be passed along through ticket prices. ...Several incentive
mechanisms, some of them market-based, would keep private sector firms focusing on safety. First of all, the flying public may show a preference for
airlines that employ security firms with rigorous procedures just as today many drivers prefer safer cars that get lower gas mileage. Second, if a
private firm were to allow a single failure or even a near-miss, it would immediately lose the confidence of fliers. Airlines would switch to other
suppliers, and the flawed firm would go out of business. Security companies also could be required to be liable for damages up to, say, $25 million from
terrorism, and to post bond to cover that liability. (It is harder to sue the government for damages than the private sector.) The government's role
would include two functions. It would collect intelligence on high-risk suspects (as it does today) and share this intelligence with private airline
security firms — which will require the firms to have robust data security. And government would audit private security companies, with the power to
impose fines if lapses are found. The government could still ensure, for instance, that every firm at least meet the minimum standards that the TSA
employs today. ...good solutions are more likely to emerge regularly and consistently under a robust market dynamic than under government
monopoly. Competition will force even the lowest-quality provider to raise standards year after year by adopting the good ideas that emerge from their
competitors. This is why even a cheap automobile today has more amenities than a luxury car of 30 years ago. Link to this Blog Entry Monday, January 25, 2010 ~ 8:50 a.m, Dan Mitchell Wrote: Brussels bureaucrats want to slap draconian European Union driving laws on Britain's roads in a new "green" campaign on motorists, it emerged last
night. Measures being considered include a barrage of new maximum speed limits in town and city areas. British motorists could also be forced to
undertake exams in "environmentally-friendly" road skills as part of an EU-wide overhaul of driving tests. And many large cars and other so-called
gas-guzzling vehicles face being banned from newly-declared "green zones" in urban centres. The latest threat of meddling from Brussels comes in an Action Plan on Urban Mobility drawn up by European Commission
transport chiefs. ...Mats Persson, of the Euro-sceptic think tank Open Europe, commented: "This illustrates that the EU simply can't stop interfering in every aspect of people's lives." Meanwhile, a different tentacle of the European octopus is proposing that the European Union be given the power to audit budget numbers from member nations. Given the fiscal fiasco in Greece, this seems like it might be a reasonable step - until one remembers that the EU's auditors every year give a failing grade to the EU's own budget practices. The EU Observer reports on the issue, but the phrase "blind leading the blind" somehow did not get included: ...the European Commission has indicated it will seek audit powers for the EU's statistics office, Eurostat, in order to verify elements of national
government accounts. ...Speaking to journalists after a meeting of EU finance ministers on Tuesday (19 January), outgoing EU economy commissioner Joaquin Almunia said greater Eurostat auditing powers could
have avoided the mistakes that led to the Greek revision. He said the commission will propose "a new regulation in order to obtain powers, which
we've already requested, to give Eurostat the possibility of carrying out audits." Last but not least, that same EU Observer story has a tiny bit of good news, or at least a dark cloud with a silver lining. Some of Europe's governments want to impose an EU-wide tax on banks. This certainly fits the theme of ever-growing levels of bureaucracy and interference from Brussels, but the good news is that there is still (even under the statist Lisbon Treaty) a national veto on tax matters. So even though some of the big nations in Europe want to demagogue against the financial sector, the EU's taxation commissioner (and former communist from Hungary) sadly indicated that such a tax probably would not make it through the process: While discussion on Greece took up considerable time, EU finance ministers did have an opportunity to discuss a Swedish proposal for an EU-wide bank levy to mitigate the effects of future financial crises. ...British, Belgian and German ministers were amongst those who showed moderate support for the idea. However, outgoing EU taxation commissioner Laszlo Kovacs said it was unlikely to fly because of EU unanimity voting in the area of taxation. Link to this Blog Entry Sunday, January 24, 2010 ~ 6:16 p.m, Dan Mitchell Wrote: A French group entitled Avenir de la Langue Française (Future of the French Language) has claimed that the invasion of English words poses a
greater "threat" to France's national identity than the imposition of German under the Nazis. Writing recently in Le Monde and l'Humanite, the
group, supported by eight other patriotic organizations, has called on the Sarkozy government to turn back the English flood. "There are more
English words on the walls of Paris," they state, "than German words under the Occupation." ...English has became the dominant language of the
Internet, air traffic control, computers, international business and by 2030 more Chinese people will be able to speak it than there are Americans.
Already by 2001, English was being spoken by more than one in three of the 350 million citizens of the European Union, whereas fewer than one in 10
spoke French outside France itself. Even in those areas where French influence has been strong —Morocco, Algeria, Syria, Vietnam, Cambodia,
Chad, and elsewhere—English has encroached very successfully. English is the official language used by the Organisation of the Petroleum Exporting
Countries, and the only working language of the European Free Trade Association, the Baltic Marine Biologists Association, the Asian Amateur
Athletics Association, the African Hockey Federation, while it is the second language of bodies as diverse as the Andean Commission of Jurists and the
Arab Air Carriers Organization. ...France's traditional response to this linguistic "Anglobalization" has been to attempt a form of legal
protectionism against the steamroller tongue of "les rosbifs" and "les Anglo-Saxons". In 1994 the French Assemblée Nationale passed the Loi
Toubon, which was signed into law by President François Mitterand. Named after Jacques Toubon, the culture minister, it stipulated that
"French shall be the language of instruction, work, trade and exchanges and of the public services. "The use of French shall be mandatory for the
designation, offer, presentation, instructions for use, and description of the scope and conditions of a warranty of goods, products and services as well
as bills and receipts. The same provisions apply to any written, spoken, radio and television advertisement" and so on for another 21 highly
prescriptive clauses. The law has been used against American and British companies, such as Disney and the Body Shop on the Champs Elysées that
had labels in English. ...In two centuries, French may have to be protected as a linguistic curio, like Britain does with Cornish or Manx. Until then, the
French must learn to be bilingual, or risk being left behind in the global market-place, gasping outraged complaints in a tongue fewer and fewer people understand. Sunday, January 24, 2010 ~ 4:54 p.m, Geoff MacLeay Wrote: The new proposed tax on banks — 15 basis points on all liabilities — is not about revenue or responsibility: It's about politics. President Obama is running away from Wall Street as fast as he can, but Wall Street has a funny way of catching up with him… …The bank tax is not only a new and unneeded burden on our struggling financial sector, it's also a long-term competitive disadvantage for
American industry: Finance is a cutthroat world, and New York City is in a constant battle with London, Shanghai, and other financial centers for jobs
and investment. If it inspires even a handful of firms to relocate, Obama's new tax could end up costing the government money in the form of forgone
revenue from personal-income taxes, corporate-income taxes, and capital-gains taxes. Wall Street's loss will be the City of London's gain. The
real mystery is why Wall Street is still paying for the privilege of being scourged. Saturday, January 23, 2010 ~ 5:23 p.m, Dan Mitchell Wrote: Germany opposes a proposal to introduce a European Union-wide tax because the bloc already has sufficient funds, the finance ministry said Monday. The comments come ahead of a meeting of euro-zone and EU
finance ministers in Brussels later Monday and Tuesday. Ministers are expected to discuss economic policy coordination. Luxembourg's Finance
Minister Luc Frieden has proposed the introduction of a European tax, with proceeds going directly into the EU budget. ...The German finance ministry
said "such a tax is not necessary because existing funding rules already ensure sufficient own funds for the EU." The ministry said such a tax would
complicate the existing financial funding system of the EU, which is based on revenues from custom duties and the EU's shares in the member states' value-added tax and gross national income. Saturday, January 23, 2010 ~ 4:07 p.m, Geoff MacLeayWrote: A great beauty of the American federal system is that any of the 50 states can offer its policies as an experiment for others. So the nation owes some
gratitude to Oregon for testing whether it is possible for a state to tax its way from deep recession to prosperity.Oregon's unemployment rate is
11.1%, among the nation's highest. But Oregonians are now voting by mail whether to endorse a pair of tax increases passed by the legislature last
year: one to raise the state's top personal income tax, to 11% from 9%, and another to raise the business income tax, to 7.9% from 6.6%. Both tax hikes would be retroactive to January 1, 2009… Friday, January 22, 2010 ~ 5:51 p.m, Dan Mitchell Wrote: Could he restore confidence in government, even as he was proposing the biggest federal intervention in the domestic economy in a generation? ...As
Obama marks the first anniversary of his inauguration on Wednesday, that question remains one of the most politically charged of his presidency -- and
central to the politics of this election year -- and will hinge on how Americans judge Obama and his policies. Will the public conclude that his
policies worked, however much they may cost and however much they may entail more government intervention in the economy? Or will they regard
his agenda as intrusive and ineffective big government? What steps may Obama take to alleviate public discontent over these first-year decisions?
...Obama receives mixed reviews for his first-year performance, according to a new Washington Post-ABC News poll. His approval rating stands at 53
percent, with 44 percent disapproving. Among independents, 49 percent approve, the lowest of any of his recent predecessors at this point in their
presidencies. ...The poll also shows how much ground Obama has lost during his first year of trying to convince the public that more government
is the answer to the country's problems. By 58 percent to 38 percent, Americans said they prefer smaller government and fewer services to larger
government with more services. Since he won the Democratic nomination in June 2008, the margin between those favoring smaller over larger government has moved in Post-ABC polls from five points to 20 points. ...
Friday, January 22, 2010 ~ 2:45 p.m, Dan Mitchell Wrote: As the financial weather worsens in Britain — bankers are being taxed 50% on this year's bonuses, and from April half of any income over £150,000 will go straight to the Inland Revenue — many of our super-rich are threatening to abandon London. Discreet advisers in Geneva, Zurich and the high-end Swiss ski resorts say that a steady trickle of wealthy Brits have either made the move or are strongly considering a new life in the mountains. In December alone eight British-based hedge funds decided to move there. "They want to be out of the UK by April," says David Butler of Kinetic, which provides services for hedge funds. "There's a lot of momentum to leave. Geneva is the most popular choice. These people are a kind of club: they go where the others are." He predicts that up to 150 funds will follow. ...Switzerland is also enormously stable: 100-year mortgages are common, property is a safe investment, and the average income is $68,000, against $44,000 in the UK. The Swiss are unlikely to bring in the kind of arbitrary tax changes that have made London's bankers so jumpy. ...The fear for the British Treasury is that a big international investment bank might relocate. So far, that has not happened. But Bob Diamond of Barclays Capital, one of Britain's highest-paid bankers, warned last month: "Both financial capital and human capital are extremely mobile." The second excerpt is based on two conversations with former British residents, both of whom are no longer being raped by Gordon Brown and his crowd of redistributionists. This should be a warning to Obama and his crowd, but England actually is not as bad as America in one key respect - investors and entrepreneurs can leave the United Kingdom without being ransacked at the border. People leaving the United States, by contrast, has subject to onerous exit taxes (disturbingly akin to the policies imposed by the Soviet Union and Nazi Germany, albeit motivated by greed and envy rather than hate): As a British citizen, "I'd get totally clobbered by the taxman if I came back to London", he admits. He is not wrong. Mike Warburton, tax director at
Grant Thornton accountants, says: "If he returned to the UK, he would be taxed on his worldwide income and gains as a UK resident domiciled
individual." Say James has £40m invested, and is getting a paltry return of 2% a year (£800,000); it would give him a tax bill of around £400,000. He
would also be clobbered, says Warburton, "on income and gains arising after his return to the UK from any capital built up while he was overseas,
and gains are taxable at 18%. Even if he put the capital into an offshore trust, he would still be caught by tax-avoidance rules in the UK. Not an
appealing prospect." In Switzerland, by contrast, life is sweet. All that is required is a deal with the local canton to pay a flat yearly forfait (forfeit).
Happily for bankers, it is all negotiable: the better connected your tax lawyer is with the local canton official, the better your deal. The Swiss are
famously good at keeping financial secrets, so there is no published list of which canton charges what, but the going rate in Geneva, the most
expensive one, is about £180,000 a year. ...Another option is to become a resident, which is fairly simple as long as you are rich and from America or
the EU, then pay tax at the local rates, which are linked to the value of property and are typically only 20% of income. ...Might her London banking
friends follow her out here? "Sure, why not?" she says, sipping white wine. "They're all pretty pissed off at the tax on bonuses and the new top rate of
50%. People like me, we're motivated by money. If you take so much away in tax, there's no incentive." Just look at the tax on a bonus of £200,000.
First, there is the new bonus tax of 50%, which costs the company another £87,500. Then there is employer's National Insurance of £25,600. Then the
employee pays income tax at 40% on the £200,000, which is £80,000, and employee's NI, another £2,000. So the total tax is a whopping £195,100.
This represents a 98% tax burden on the net payment of £200,000 to the employee. Thursday, January 21, 2010 ~ 12:38 p.m, Andrew Quinlan Wrote: President Obama's misbegotten bank tax is precisely the wrong policy at precisely the wrong time. It will wind up backfiring across the board. Why?
Because bank consumers and borrowers are the ones who will wind up paying this tax, creating an obstacle to economic recovery.
Thursday, January 21, 2010 ~ 11:23 a.m, Dan Mitchell Wrote: Sebastián Piñera, a billionaire businessman, has defeated Chile's ruling leftist coalition to return the right to power for the first time since the return
of democracy after General Augusto Pinochet's dictatorship in 1990. With 99.2 per cent of the vote counted, giving Mr Piñera a lead of 51.61 per cent
to Mr Frei's 48.38 per cent, the former president conceded defeat. It was the right's first victory at the ballot box in Chile since 1958 and bucks a
South American trend with the left in power in many countries from Venezuela to Brazil to Argentina. Thursday, January 21, 2010 ~ 9:45 a.m, Dan Mitchell Wrote: Students were evacuated from Millennial Tech Magnet Middle School in the Chollas View neighborhood Friday afternoon after an 11-year-old student
brought a personal science project that he had been making at home to school, authorities said. ...The school, which has about 440 students in grades 6 to 8 and emphasizes technology skills, was initially put on
lockdown while authorities responded. Luque said the project was made of an empty half-liter Gatorade bottle with some wires and other electrical
components attached. There was no substance inside. ...A MAST robot took pictures of the device and X-rays were evaluated. About 3 p.m., the device
was determined to be harmless, Luque said. Luque said the project was intended to be a type of motion-detector device. Both the student and his
parents were "very cooperative" with authorities, Luque said. He said fire officials also went to the student's home and checked the garage to make
sure items there were neither harmful nor explosive. "There was nothing hazardous at the house," Luque said. The student will not be prosecuted, but
authorities were recommending that he and his parents get counseling, the spokesman said. The student violated school policies, but there was no
criminal intent, Luque said. ...Luque said both the student and his parents were extremely upset. "He was very shaken by the whole situation, as were his parents," Luque said Wednesday, January 20, 2010 ~ 3:07 p.m, Dan Mitchell Wrote: 1. Obamacare is an albatross for the Democrats. The White House wants to blame Coakley for being a bad candidate, but Massachusetts is a very
left-wing state. Every single member of its congressional delegation is a Democrat. It went for Obama by 26 percentage points. It has sent reflexive
statists like Ted Kennedy and John Kerry to the Senate for decades. Yes, Scott Brown was a good candidate, but good GOP candidates normally lose
60-40 in the Bay State. It's hard to draw any conclusion other than the fact that voters were registering disapproval with what is happening in Washington, and healthcare was at the top of their list. Wednesday, January 20, 2010 ~ 3:00 p.m, Dan Mitchell Wrote: In an epic upset in liberal Massachusetts, Republican Scott Brown rode a wave of voter anger to defeat Democrat Martha Coakley in a U.S. Senate
election Tuesday that left President Barack Obama's health care overhaul in doubt and marred the end of his first year in office. The loss by the
once-favored Coakley for the seat that the late Sen. Edward M. Kennedy held for nearly half a century signaled big political problems for the
president's party this fall when House, Senate and gubernatorial candidates are on the ballot nationwide. More immediately, Brown will become the 41st
Republican in the 100-member Senate, which could allow the GOP to block the president's health care legislation and the rest of Obama's agenda.
Democrats needed Coakley to win for a 60th vote to thwart Republican filibusters. Wednesday, January 20, 2010 ~ 1:40 p.m, Geoffrey MacLeay Wrote: Marriage is a revered institution in America but not apparently under the Congressional health care legislation, which contains steep "marriage penalty" taxes, i.e. tax burdens that only get heavier when a couple says, "I do." Under the Senate bill, if family income rises above a certain level, couples lose benefits or have to pay higher taxes. That's an incentive for dual-income couples to skip the marriage ceremony altogether and continue to file as singles. For cohabitators, the savings could amount to thousands of dollars a year. Take two low-wage workers who are considering marriage. In 2016, if each has an income $11,800, they would each have to pay $248 as singles for government-approved health insurance. Married, their joint income climbs to $23,600 and they would have to pay $1,109 -- a ding of more than $600 annually. Middle-class workers could get hit even harder. According to the Congressional Budget Office, a single individual earning $35,400 -- three times the poverty rate -- would be obligated to pay $3,611 for mandatory health insurance. But two such individuals, if married, would lose their eligibility for government subsidies and their mandatory health insurance payments would rise to $13,100 -- a whopping $5,878 annual marriage penalty. An analysis done by Senator Charles Grassley of Iowa, ranking Republican on the Senate Finance Committee, finds that the Senate health bill "will cause the 7% of Americans who are eligible to receive the subsidy to pay more for health insurance just by getting married." Call it marital non-bliss. "I've always argued," fumes former House Majority Leader Dick Armey, "that our tax code rewards vice and punishes virtue," with the marriage
penalty being a typically perverse example. And ObamaCare would only make it worse. Link to this Blog Entry Wednesday, January 20, 2010 ~ 11:44 a.m, Dan Mitchell Wrote: During an interview on C-SPAN's "Newsmakers" program that aired on Sunday, Shulman said he uses a tax preparer for his own returns. "I've used
one for years. I find it convenient. I find the tax code complex so I use a preparer," Shulman said. Pressed on how he would make the tax code
simpler, Shulman responded, "I don't write the tax laws. Congress writes the tax laws so that's a whole different discussion." ...Later in the C-SPAN
interview, Shulman downplayed his use of a tax preparer, saying he has used one for 10 years. He noted that he and President Barack Obama are
proponents of simplifying the tax code. Shulman said about 60 percent of Americans use tax preparers and another 20 percent use software to file their returns. Link to this Blog Entry Wednesday, January 20, 2010 ~ 10:12 a.m, Dan Mitchell Wrote: Travel is a hassle for an 8-year-old Cub Scout from New Jersey. That's because Mikey Hicks shares the same name of a person who has drawn the suspicion of
the Homeland Security Department. His mother tells The New York Times she sensed trouble when her son was a baby and she couldn't get a seat for him at a
Florida airport. She says airline officials explained his name "was on the list." ...TSA officials have been under fire of late, after the failed Christmas Day terror
plot aboard a U.S.-bound plane and a complete security breach led to a chaotic breakdown at Newark Liberty International Airport. Link to this Blog Entry Tuesday, January 19, 2010 ~ 8:45 p.m, Dan Mitchell Wrote: Low-income neighborhoods tend to have their own economic characteristics, one of the most salient of which is that prices tend to be higher there than in other neighborhoods. Intellectuals' discussions of the
fact that "the poor pay more" are often indignant indictments and condemnations of those who charge higher prices to people who can least
afford to pay them. The causes of those high prices are implicitly assumed to originate with those who charge them, and in particular to be due to malign
dispositions such as "greed," "racism" and the like. ...Among the underlying realities in many low-income neighborhoods are higher rates of crime,
vandalism and violence, as well as a lack of the economic prerequisites for the economies of scale which enable big chain stores to charge lower prices
and make profits on higher rates of inventory turnover in more affluent neighborhoods. But such mundane considerations do not present intellectuals with either an opportunity to display their special kind of
knowledge or an opportunity to display their presumptions of superior virtue by condemning others. ...With intellectuals who consider themselves
knowledgeable, as well as compassionate, it would seldom occur to them to regard themselves as interfering with things of which they are very ignorant
— and doing so at costs imposed on people far less fortunate than themselves. Link to this Blog Entry Tuesday, January 19, 2010 ~ 2:56 p.m, Dan Mitchell Wrote: A...businessman was arrested at home in front of his wife and young son over an email which council officials deemed 'offensive' to gipsies – but
which he had not even written. ...The 45-year-old IT boss was held in a police cell for four hours until it was established he had nothing to do with
the email, which had been sent by one of his then workers, Paul Osmond. But police had taken his DNA and later confirmed they would be holding it
indefinitely. The businessman, who has asked not to be named, was also fingerprinted in the police investigation estimated to have cost taxpayers up
to £12,000. He said two uniformed officers came to his house on a Sunday afternoon and said he would be handcuffed if he did not accompany them to
the police station. His computer and other internet equipment were also seized. This next story may be even crazier. The Guardian reports that a woman - alone with her daughter inside her own home - was warned by police for waving a knife at some thugs who were looking in her window. The police (and this is not a joke) told her that you're not allowed to protect yourself against an intruder. Gee, that must be very comforting for the rape, assault, and burglary victims in the United Kingdom. Let's pray this level of idiocy does not cross the Atlantic: Myleene Klass has been warned by police for waving a knife at teenagers who were peering into a window of her house late at night. Klass was in the
kitchen with her daughter upstairs when she spotted the youths in her garden just after midnight on Friday. She grabbed a knife and banged the
windows before they ran away. Hertfordshire police warned her she should not have used a knife to scare off the youths because carrying an "offensive
weapon", even in her own home, was illegal. ...Klass's spokesman, Jonathan Shalit, ...told the Sunday Telegraph. "...the police explained to her that even
if you're at home alone and you have an intruder, you are not allowed to protect yourself, Link to this Blog Entry Monday, January 18, 2010 ~ 7:09 p.m, Dan Mitchell Wrote: The UK government has announced the formation of a new panel of experts to recommend changes that aim to reduce the size of the 'hidden' economy
and the 'tax gap' between taxes legally owed and those actually paid. ...Mike Eland, HMRC's Director General of Enforcement and Compliance...commented: "We estimate that the hidden economy
contributes to around 7.5% of the net tax gap, which means we could be losing in the region of GBP3bn a year from people who are living and working in the hidden economy. They also gain an unfair competitive
advantage over businesses that pay their taxes. This new group of experts with a variety of experience will identify new practical steps to tackle this problem." Monday, January 18, 2010 ~ 4:23 p.m, Dan Mitchell Wrote: A report presented recently to the French Culture Ministry has proposed a series of measures designed to improve the legitimate supply of cultural
services provided over the Internet and their financing, including most notably the introduction of a new tax to be levied on the online advertising
revenue derived by Internet giants such as Google. ...In order to finance the proposals, estimated at around EUR50m in 2010, and between EUR35m and EUR40m a year in 2011 and 2012, the report advocates the
introduction of a levy imposed on online advertising revenue. Dubbed the "Google tax" by one of the main authors of the report, Jacques Toubon,
himself a former French Culture Minister, the levy is designed to support creative industries and online press sites. A threshold level for the tax would
ensure that the levy only affects large companies such as Google, Microsoft, AOL, Yahoo, and Facebook. If the French politicians limited to themselves to raping French citizens, that would be reprehensible, but not exactly a reason for the rest of the world to be upset. Unfortunately, the French government has a misery-loves-company attitude and is always trying to export bad policy to other nations. France, for instance, is a leading supporter of the OECD's anti-tax competition crusade (not surprisingly, the OECD is based in Paris even though the US pays one-fourth of the bureaucracy's bloated budget). Another example is France's campaign to impose an EU-wide carbon tax, which combines the worst aspects of big government, protectionism, and enviro-radicalism. The EU Observer reports: France intends to push for a tax on carbon emissions across the European Union, President Nicolas Sarkozy said on Wednesday (6 December), a week
after his country's top court struck down an attempt to introduce just such a tax domestically. Mr Sarkozy also wants to see carbon "tariffs" slapped on
products entering the EU from countries with weaker environmental legislation. ...Any carbon tariff move is likely to meet with stiff resistance
from other EU member states, particularly the more free-trade oriented nations, who would view such a levy as a form of protectionism. When an
EU carbon tax imposed at the borders of the bloc was first mooted at a meeting of European environment ministers last July, the idea was given a
frosty reception, particularly by Germany. ...In response, the French government is to present a re-edited version of the bill on 20 January,
taking into consideration the court's objections. On Tuesday, French finance minister Christine Lagarde said that the new law would would involve a
progressive tax, with different brackets similar to income taxation. Sunday, January 17, 2010 ~ 2:00 p.m, Dan Mitchell Wrote: One of the law firms hired to provide legal work for the Treasury Department on a multibillion-dollar federal loan program also lobbied Congress for a private client pushing to expand the same government
initiative, records show. The Treasury Department retained Sonnenschein, Nath & Rosenthal LLP more than a year ago to provide legal advice on the
Federal Reserve's Term Asset-Backed Securities Loan Facility (TALF), a program aimed at boosting lending to small businesses and consumers.
While advising the government on TALF last year, the law firm also lobbied Congress for the Recreational Vehicle Industry Association (RVIA), an
industry group seeking to expand TALF to include recreational vehicle loans. ...Treasury said its officials did not know about the firm's lobbying
work. "Sonnenschein did not notify Treasury about its work on behalf of the RVIA," spokesman Andrew Williams said when first contacted last year
about the arrangement. In addition, Mr. Williams said, Treasury officials met with the firm "to discuss the issue and our expectations regarding
notification of actual or potential conflicts of interest." ...According to a federal contracting database, the government has awarded more than $3
million to the firm in connection with its legal work on both TALF and auto-loan programs. The broader lesson from this article is that big government creates big opportunities for corruption. This video explains why Washington is a rat's nest of special interest deal making.
Sunday, January 17, 2010 ~ 10:13 a.m, Dan Mitchell Wrote: Governor Brian Schweitzer this week ordered a 5% across the board cut in state agency spending. The Governor, a Democrat, called the spending cuts
"pro-active measures to make sure we live within our means." Imagine that. More remarkable is that Montana is one of three states—North Dakota and
Texas are the others—without a budget deficit. They are all states that benefit from high oil and energy prices, but Mr. Schweitzer wants to continue his state's habit of balancing the books during the economic
downturn without a tax increase. In 2007 he offered a $400 per homeowner property tax cut. The former rancher and businessman has also cancelled
low-priority renovations and decorations on state buildings, cut state agency travel budgets by 35% in favor of video conferencing, and nearly
eliminated state printing costs by posting state documents online. He's vetoed more than 30 spending bills and has been one of the loudest critics of
the pork projects that have been funded with federal stimulus money. ...If President Obama and other Democrats want to rehabilitate themselves in
2010, they could do worse than follow Mr. Schweitzer's common-sense lead and cut federal agency spending by 5%. Saturday, January 16, 2010 ~ 4:32 p.m, Dan Mitchell Wrote: The Internal Revenue Service plans to test, register and screen people who get paid to prepare tax returns, stepping into a virtually unregulated
business on which millions of Americans depend for crucial financial services. The agency wants to crack down on preparers who do shoddy or fraudulent work and create a way for consumers to make more informed
choices -- though the moves could increase the cost of having tax returns prepared. "In most states you need a license to cut someone's hair," but
today "most tax-return preparers don't have to meet any standards when they sit down and prepare a federal tax return for an American taxpayer," IRS Commissioner Douglas Shulman said in an interview
Monday. ...Starting with the 2011 tax season, the IRS plans to require paid preparers to register with the agency. Subsequently -- the timeline is not yet
firm -- they will be required to pass competency tests and receive continuing professional education. ...The new testing and education standards will
exempt certified public accountants, lawyers, and tax practitioners known as "enrolled agents," who are cleared to represent taxpayers in dealing with
the IRS and are already subject to professional or government requirements. ...Tax prep giants H&R Block and Jackson Hewitt expressed support for the
requirements announced Monday. Under the new rules, H&R Block "won't be competing against people who aren't regulated and don't have the same
standards as we do," said Kathryn Fulton, senior vice president for government relations. ...Citing a gap in the agency's plan, Fulton said the
IRS should impose the same rules on unpaid preparers of tax returns. ...In field tests, the IRS noted Monday, tax-return preparers often gave bad advice. In a 2006 study in which employees of the Government
Accountability Office posed as taxpayers and visited outlets of tax prep chains, all 19 preparers made mistakes, the IRS reported. ...It is unclear how
much of the blame rests with the tax code's confusing nature, a perennial target of politicians' criticism. Do regulated professionals such as CPAs
perform better than their unregulated counterparts? The IRS commissioner said the agency does not have the data to answer that question. Friday, January 15, 2010 ~ 6:21 p.m, Dan Mitchell Wrote:
Here's a chart, based on data from the Philadelphia Fed, showing actual economic results compared to the predictions of professional economists. As you can see, my
profession does a wretched job. Comparisons based on predictions from the IMF, OECD, CBO, and OMB doubtlessly would generate equally embarrassing results. This
does not mean economists are idiots (insert obvious joke here), but it is an additional reason why Keynesianism is misguided. If economists are unable to predict what's going
to happen with the economy in the near future, why should we expect anything positive when politicians tinker with short-run economic performance? That's especially the case
when they pass so-called stimulus legislation that increases the burden of government spending. h/t: James Montier, via Paul Kedrosky via Andrew Sullivan Thursday, January 14, 2010 ~ 11:19 a.m, Dan Mitchell Wrote: The economic crisis could present an opportunity to harmonise taxation policy across EU member states, according to officials at the European
Parliament who contributed to a major report on the future development of the EU. ...The comprehensive document, released with minimal fanfare at
the end of 2009, was prepared by researchers in the EU assembly's five policy departments. ...The report sets out three possible scenarios likely to
emerge over the next five-to-ten years, saying further harmonisation of direct taxation would be "desirable but has not been realistic until now".
Unified corporate tax rates, a long-standing target of European federalists, is set out as an objective. This will cause controversy in some corners, not
least in Ireland, which last year was given assurances by European leaders that the Lisbon Treaty would not affect its relatively low corporate tax
regime. The officials suggest the window of opportunity may not last long. ..."The problem with common fiscal and tax policies is that decisions in the
EU are taken on a unanimity basis and the European Parliament has little legislative role," according to the report. Thursday, January 14, 2010 ~ 10:15 a.m, Dan Mitchell Wrote: Not surprisingly, Rove even tries to blame Obama for some of Bush's overspending, writing that "...discretionary domestic spending now stands at $536 billion, up nearly 24% from President George W. Bush's last full year budget in fiscal 2008 of $433.6 billion. That's a huge spending surge, even for a profligate liberal like Mr. Obama." This passage leads the reader to assume that Obama should be blamed for what happened in fiscal years 2009 and 2010, but as I've already explained, the 2009 fiscal year started about four months before Obama took office and 96 percent of the spending can be attributed to Bush's fiscal profligacy. Yes, Obama is now making a bad situation worse by further increasing spending, but he should be criticized for continuing Bush's mistakes. Rove then has the gall to complain that Obama is "...growing the federal government's share of GDP from its historic post-World War II average of roughly 20% to the target Mr. Obama laid out in his budget blueprint last February of 24%." Yet a quick look at the budget data shows that the burden of federal spending jumped from 18.4 percent of GDP when Bush took office to more than 25 percent of economic output when he left office. Even if the (hopefully) temporary bailout costs are not counted, Bush and Rove are the ones who deserve most of the blame for today's much larger burden of government. It should be noted, by the way, that none of the new spending under Bush was imposed over his objection. He did not veto any legislation because of excessive spending. Finally, Rove concludes by writing that, "After a year of living in his fiscal fantasy world, Americans realize they have a record deficit-setting, budget-busting spender on their hands." I'm almost at a loss for words after reading this sentence. All during the Bush years, I would complain to people in the Administration about wasteful spending. It didn't matter whether I was talking to people at the Office of Management and Budget, the Council of Economic Advisers, the Treasury Department, or the National Economic Council. They almost always expressed sympathy for what I was saying, and then complained that the decisions were being made by the "White House political people." There's an old joke about chutzpah and it features a guy who murders his parents and then asks the court for mercy because he's an orphan. Karl Rove has taken the joke to
the next level, but there's nothing funny about the consequences for America. Wednesday, January 13, 2010 ~ 8:21 p.m, Andrew Quinlan Wrote:
Tuesday, January 12, 2010 ~ 5:39 p.m, Dan Mitchell Wrote: Even though Rand published "Atlas" in 1957, her descriptions of intrusive and bloated government read like today's news. The "Preservation of
Livelihood Law" and "Equalization of Opportunity Law" could be Nancy Pelosi's or Harry Reid's work. The novel's chief villain is Wesley Mouch, a
bureaucrat who cripples the economy with endless regulations. This sounds familiar. Reason magazine reports that "as he looks around Washington
these days," Rep. Paul Ryan "can't help but think he's seeing a lot of Wesley Mouch". Me, too. I also saw a lot of him under George W. Bush. So I'm
conducting this unscientific poll: Who is our Wesley Mouch? Hank Paulson? Tim Geithner? Barney Frank? You can vote here. Personally, I think Chris
Dodd's ridiculous financial proposals ought to win him the honor. But he isn't among the choices on Fox's list. As I write this, Geithner, President
Obama and Barney Frank lead the voting. ...Rand brings out ferocious hatred in some people. ...Had today's bureaucrats been in charge decades
ago, they would have banned things like aspirin, cars and airplanes. Sadly, they are in charge now. That makes the "Atlas" message important today.
Although Rand idolizes businessman in the abstract, "Atlas Shrugged" makes clear that she (like Adam Smith) understood that they are not natural
friends of free markets. They are often first in line for privileges bestowed by the state. That's called "crony capitalism," and that's what Orren Boyle practices in "Atlas." Tuesday, January 12, 2010 ~ 4:43 p.m, Dan Mitchell Wrote: To produce this annual Index we consider nine categories: Cost of Living, Culture and Leisure, Economy, Environment, Freedom, Health, Infrastructure, Safety and Risk, and Climate. This involves a lot of number
crunching from "official" sources, including government websites, the World Health Organization, and The Economist, to name but a few. We also
take into account what our editors from all over the world have to say about our findings. 1. FRANCE While I enjoy hammering French socialists, this does not mean I disagree with the list. International Living's Index basically measures good places to live for people who already have money. France is a very nice country to visit, and would be a very nice place for a rich person to live depending on one's preferences for food, weather, and culture. Personally, I'd go for someplace warm and sunny, such as the Cayman Islands (which only ranks 54th out of 194 options). There are plenty of interesting details in the comprehensive table, including Liechtenstein being the only place to get a perfect score in the economy category. Somalia was the worst overall country. The biggest surprise, at least to me, is that Singapore was ranked 70th. Seems rather low since a number of rich people are choosing to become Singapore residents. Monday, January 11, 2010 ~ 4:11 p.m, Dan Mitchell Wrote: Borios Johnson, the London Mayor, has suggested that he is deeply troubled that Goldman Sachs is considering moving parts of its business out of
Britain following the Government's 50pc tax on bonuses. "I am extremely anxious about rumours in the City that seem to confirm that the recent
knee-jerk and ill-thought-out tax grab by the Government to punish bankers is causing some of our most important institutions to consider their
options," Mr Johnson told The Daily Telegraph. "This should act as a strong wake-up call to our leaders that their policies could seriously threaten our
competitiveness with long-term consequences for both London and the UK economy," said the mayor amid growing speculation that London could face
a mass exodus of City workers in the wake of the bonus tax. Goldman Sachs is the latest investment bank to review its London operations, joining
broker Tullett Prebon which told its staff it would give them the option of moving overseas to avoid the tax. ...Goldman, which paid £1.1bn in corporation tax last year, has launched an internal review of London
operations which could see its proprietary trading desk and foreign exchange business relocating to Switzerland or Dubai. Sunday, January 10, 2010 ~ 2:53 p.m, Dan Mitchell Wrote: British taxpayers are helping to fund basket-weaving and slapstick acting workshops for young people across Europe. The projects, which include
meetings about folk dancing and even a scheme to promote afternoon siestas, are part of an £800million EU programme to help people aged 13-30 'feel European'. Because the UK Government provides ten per cent of
the EU's central budget, it is likely around £80million of the cash used to run the Youth In Action programme could have come from British taxpayers... One Serbian project that received £21,000 involved using
silent-movie slapstick to promote 'non-verbal communication'. Another venture in Finland received thousands to support a coffee house which
offered 'everyone the chance to have a sleep for free'. It aimed to encourage afternoon naps to reduce stress. 'Youth exchange participants' also flocked
to Macedonia last year for a meeting entitled Stories And Legends, receiving £18,000 to explore storytelling. ...An EC spokesman said the projects were
about exposing young people to other cultures and increasing their participation in society. He added: 'I don't see anything wrong with basket-weaving or music-making if it encourages young people to meet
other Europeans and learn a new skill from another part of Europe.' Saturday, January 9, 2010 ~ 5:54 p.m, Dan Mitchell Wrote: Taxpayers will heavily subsidise a skiing holiday in the Italian Alps for the children of MEPs and European Parliament officials in February. ...The
eight-day skiing trip for 80 children aged between eight and 17 is timed to begin over the weekend of St Valentine's Day, providing some romantic time
off from parenting for officials. Costs, the holiday is priced at 920 euros (£822), are generously subsidised by the parliament's budget. Households
receive different levels of subsidy depending on their monthly income but even those on a income of over £108,000 get a discount. There is reduction
of up to 52 per cent for officials earning £69,620 a year and an MEP, earning £86,000, is eligible for a subsidy of 45 per cent. ...The children will
enjoy full board in a three-star hotel in the beautiful village of Spiazzi. The trip includes "workshops" in a "multilingual environment" on the themes of
"the mountain, its snow, its nature". Four hours each day will be spent on the ski slopes and three hours on lessons, such as an "exercice (sic) with
snow dogs" as well as "open air games" and a "torchlight procession". The parliament's spokesman declined to comment on the holiday. Saturday, January 9, 2010 ~ 12:34 p.m, Dan Mitchell Wrote: ...there's still some ugly 2009 business to report: To wit, the Treasury's Christmas Eve taxpayer massacre lifting the $400 billion cap on potential
losses for Fannie Mae and Freddie Mac as well as the limits on what the failed companies can borrow. The Treasury is hoping no one notices, and no
wonder. Taxpayers are continuing to buy senior preferred stock in the two firms to cover their growing losses—a combined $111 billion so far. When
Treasury first bailed them out in September 2008, Congress put a $200 billion limit ($100 billion each) on federal assistance. Last year, the
Treasury raised the potential commitment to $400 billion. Now the limit on taxpayer exposure is, well, who knows? ...The loss cap is being lifted because the government has directed both companies to pursue
money-losing strategies by modifying mortgages to prevent foreclosures. Most of their losses are still coming from subprime and Alt-A mortgage bets
made during the boom, but Fannie reported last quarter that loan modifications resulted in $7.7 billion in losses, up from $2.2 billion the
previous quarter. The government wants taxpayers to think that these are profit-seeking companies being nursed back to health, like AIG. But at least
AIG is trying to make money. Fan and Fred are now designed to lose money, transferring wealth from renters and homeowners to overextended
borrowers. Even better for the political class, much of this is being done off the government books. The White House budget office still doesn't fully
account for Fannie and Freddie's spending as federal outlays, though Washington controls the companies. Nor does it include as part of the national debt the $5 trillion in mortgages—half the market—that the
companies either own or guarantee. ...This subterfuge also explains the Christmas Eve timing. After December 31, Team Obama would have needed the consent of Congress to raise the taxpayer exposure beyond $400
billion. By law, negative net worth at the companies forces them into "receivership," which means they have to be wound down. Unlimited
bailouts will now allow the Treasury to keep them in conservatorship, which means they can help to conserve the Democratic majority in Congress by
increasing their role in housing finance. ...All of which would seem to make the CEOs of Fannie and Freddie the world's most overpaid bureaucrats. A
release from the Federal Housing Finance Agency that also fell in the Christmas Eve forest reports that, after presiding over a combined $24
billion in losses last quarter, Fannie CEO Michael Williams and Freddie boss Ed Haldeman are getting substantial raises. Each is now eligible for up
to $6 million annually. Freddie also has one of the world's highest-paid human resources executives. Paul George's total compensation can run up
to $2.7 million. It must require a rare set of skills to spot executives capable of losing billions of dollars. Where is Treasury's pay czar when we actually
need him? You guessed it, Fannie and Freddie are exempt from the rules applied to the TARP banks. Friday, January 8, 2010 ~8:23 p.m, Dan Mitchell Wrote: If you've flown into Ronald Reagan Washington National Airport and your plane took the northern approach coming down the Potomac, you may have
looked out the window at the five-, six- or seven-bedroom homes on both the Maryland and Virginia sides of the river, with three-car garages and
swimming pools. Thanks to the Obama administration and General Motors, your tax dollars are now subsidizing the millionaire lobbyists who live in
these neighborhoods. GM, the failed carmaker whose $400 million in monthly losses is borne mostly by U.S. taxpayers, has in recent months hired
high-priced K Street lobbyists to petition Washington for subsidies, special tax breaks and other government favors on top of the $52 billion in aid the
Treasury has already provided. ...GM has since rehired two of its old K Street firms, the Duberstein Group and Greenberg Traurig, and picked up
new representation in the firm GrayLoeffler. Rounding out GM's K Street quartet is the well-connected Washington Tax Group, which began representing the company in 2007 and kept its affiliation with GM over the
summer, according to a search of the House and Senate lobbying databases. ...Among the four firms, 18 lobbyists are registered to represent GM,
including many wealthy and well-connected revolving-door players from both parties. Former Reps. William Gray III, D-Pa., and Jim Bacchus, R-Fla., are both on GM retainer, as are fabled Republican and Democratic
operatives Ken Duberstein (White House chief of staff under Ronald Reagan) and Michael Berman (counsel to Vice President Walter Mondale and campaign aide to every Democratic presidential nominee since LBJ).
...GM, of course, is still owned mostly by the federal government and is still losing money -- $1.2 billion in the third quarter. That means the company's
expenses are the taxpayer's expenses. That means you are paying these lobbying fees. Put another way, the Obama administration, through GM, is
transferring wealth from average Americans to millionaire former public officials. ...I contacted the White House and the Treasury Department to ask
whether the administration found this arrangement appropriate, but neither returned my calls and e-mails. None of the lobbying firms returned calls or
e-mails, either. ...The auto bailouts of Presidents Bush and Obama teach us once again that when government gets bigger, it's the well-off who fare the best. Thursday, January 7, 2010 ~ 11:23 p.m, Dan Mitchell Wrote: The fight involves an especially egregious example of today's eminent domain racket. The issue is a form of government theft that the Supreme
Court encouraged with its worst decision of the last decade -- one that probably will be radically revised in this one. The Atlantic Yards site, where
10 subway lines and one railway line converge, is the center of the bustling Prospect Heights neighborhood of mostly small businesses and middle-class
residences. Its energy and gentrification are reasons why 22 acres of this area -- the World Trade Center site is only 16 acres -- are coveted by Bruce
Ratner, a politically connected developer collaborating with the avaricious city and state governments. To seize the acres for Ratner's use, government
must claim that the area -- which is desirable because it is vibrant -- is "blighted." ...The condo of Daniel Goldstein, his wife and year-old
daughter, which cost Goldstein $590,000 in 2003, is on part of the land where Ratner's $4.9 billion project would be built -- with the assistance of
more than $1 billion in corporate welfare from the state and city governments, which are drowning in red ink. The Goldsteins' building would
not seem blighted to anyone not paid to see blight for the convenience of the payers. Which is of constitutional significance. ...Enter Ratner, with plans to
build a huge complex of high-rise residences, commercial properties and a basketball arena for the NBA's New Jersey Nets, which he bought. The city
and state governments salivated at the thought of new revenues -- perhaps chimerical -- to waste. The problem was, and is, that people live and work
where Ratner wants to build. So blight had to be discovered. It duly was, by a firm that specializes in such discoveries. New York's highest court ratified
that finding, 6-1. But a week later, Columbia University, which has plans for a $6.3 billion expansion in Manhattan, was stymied in its attempt to
wield the life-shattering power of eminent domain against several local businesses that do not want to be shattered. A state court held, 3-2, that
condemnation proceedings had been unconstitutional. The court said the blight designation was "mere sophistry": "Even a cursory examination of
the study reveals the idiocy of considering things like unpainted block walls or loose awning supports as evidence of a blighted neighborhood." The
idiocy was written on Columbia's behalf by the same firm the Empire State Development Corporation hired to find blight at the Brooklyn site. Both
Columbia and Ratner are operating in partnership with the ESDC, an arm of the state government. Both Columbia's and Ratner's attempts at seizing
property are "pretextual takings," using trumped-up accusations of blight to concoct a spurious "public use" for a preconceived project. Wednesday, January 6, 2010 ~ 10:55 a.m, Dan Mitchell Wrote: A new Rasmussen Reports poll shows that if he were running for re-election today, Mr. Nelson would lose to Nebraska's GOP Governor David Heineman by a stunning 61% to 30%. Only three years ago, Mr. Nelson won
his current term with a solid 64% of the vote. Clearly, the senator's fall in public esteem is a direct reaction to his having voted for the health care bill
as part of a deal in which Nebraska was exempted from the costs of new federal Medicaid mandates. The ObamaCare bill was already unpopular enough in Nebraska but became even more so when state residents
discovered they would be saddled with it anyway, plus exposed to national ridicule over Mr. Nelson's sweetheart deal. Now 53% strongly oppose the
bill, while another 11% somewhat oppose it. Only 17% favor the deal that Mr. Nelson struck in order to vote for the bill. Tuesday, January 5, 2010 ~ 1:46 p.m, Dan Mitchell Wrote: Democrats desperately wanted a bipartisan bill and would have given a lot to get a few Republicans on board. This undoubtedly would have led to
enactment of a better health bill than the one we are likely to get. But Republicans never put forward an alternative health proposal. Instead, they
took the position that our current health system is perfect just as it is. Bruce makes several compelling points in the article, especially when he notes that it will be virtually impossible to repeal a bad bill after 2010 or 2012, but there are good
reasons to disagree with his analysis. First, he is wrong in stating that Republicans were united against any compromise. Several GOP senators spent months trying to negotiate
something less objectionable, but those discussions were futile. Also, I'm not sure it's correct to assert Republicans took a the-current-system-is-perfect position. They may
not have offered a full alternative (they did have a few good reforms such as allowing the purchase of insurance across state lines), but their main message was that the Democrats
were going to make the current system worse. Strikes me as a perfectly reasonable position, one that I imagine Bruce shares. But let's further explore Bruce's core
hypothesis: Would compromise have generated a better bill? It's possible, to be sure, but there are also several reasons why that approach may have backfired: Monday, January 4, 2010 ~ 10:51 a.m, Dan Mitchell Wrote: Starting Jan. 1, the estate tax -- which can erase nearly half of a wealthy person's estate -- goes away for a year. For families facing end-of-life
decisions in the immediate future, the change is making one of life's most trying episodes only more complex. "I have two clients on life support, and
the families are struggling with whether to continue heroic measures for a few more days," says Joshua Rubenstein, a lawyer with Katten Muchin
Rosenman LLP in New York. ...The macabre situation stems from 2001, when Congress raised estate-tax exemptions, culminating with the tax's disappearance next year. However, due to budget constraints, lawmakers
didn't make the change permanent. So the estate tax is due to come back to life in 2011 -- at a higher rate and lower exemption. To make it easier on
their heirs, some clients are putting provisions into their health-care proxies allowing whoever makes end-of-life medical decisions to consider changes
in estate-tax law. ...Of course, plenty of taxpayers themselves are eager to live to see the new year. One wealthy, terminally ill real-estate entrepreneur
has told his doctors he is determined to live until the law changes. "Whenever he wakes up," says his lawyer, "He says: 'What day is it? Is it
Jan. 1 yet?'" ...Congress could pass an estate tax next year and make it retroactive to Jan. 1. Whether that would withstand a court challenge is a
subject of debate in the estate-planning world. ...In addition, the composition of the Supreme Court has changed, and some financial advisers
believe the court might not again bless a retroactive law. ...The situation is causing at least one person to add the prospect of euthanasia to his
estate-planning mix, according to Mr. Katzenstein of Proskauer Rose. An elderly, infirm client of his recently asked whether undergoing euthanasia
next year in Holland, where it's legal, might allow his estate to dodge the tax. His answer: Yes. Sunday, January 3, 2010 ~ 7:12 a.m, Dan Mitchell Wrote: Does living in a blue state make people blue? It seems so, according to a new study in Science magazine that ranks states according to their
happiness. The study finds that New Yorkers are the unhappiest people in America and their neighbors in Connecticut come in a close second,
followed by Michigan, Indiana, New Jersey, California, and Illinois. And the happiest states? Drum roll, please…Louisiana, Hawaii, Florida, Tennessee,
and Arizona. Eight of the ten happiest states lean right while eight of the ten unhappiest tilt left. While the study by no means proves that being liberal
makes people unhappy, it does reflect some of the unfortunate implications of living in a blue state. ...According to the Tax Foundation 2008 analysis,
three of the top five unhappiest states—New York, Connecticut and New Jersey—have the highest state-local tax burdens. On the other hand, four of the top five happiest states—Louisiana, Florida, Tennessee and
Arizona—are among the states with the lowest state-local tax burdens. True, correlation doesn't prove causation, and high taxes alone don't always
make people miserable, but there's something going on here. ...Many liberal state governments like those in Albany, Trenton and Sacramento are spending more and more on entitlement programs and public employee
pensions, racking up more and more debt, and imposing more and more taxes to pay for it all---while ignoring their taxpayers' needs. Taxpayers,
however, aren't just getting unhappy. They're getting out. United Van Lines' 2009 annual study shows that New York, New Jersey, Michigan and Illinois
are among the states with the highest outbound migration while Alabama and Tennessee are among the states with the highest inbound migration.
...Taxes may not be the root of all unhappiness, but they do result in some very sad citizens. Saturday, January 2, 2010 ~ 9:23 p.m, Dan Mitchell Wrote: It looks like a happy new year for you -- if you're a public employee. That's the takeaway from a recent Rasmussen poll that shows that 46 percent of
government employees say the economy is getting better while just 31 percent say it's getting worse. In contrast, 32 percent of those with
private-sector jobs say the economy is getting better, while 49 percent it is getting worse. Nearly half, 44 percent, of government employees rate their
personal finances as good or excellent. Only 33 percent of private-sector employees do. It sounds like public- and private-sector employees are
looking at different Americas. And they are. Private-sector employment peaked at 115.8 million in December 2007, when the recession officially
began. It was down to 108.5 million last November. That's a 6 percent decline. Public-sector employment peaked at 22.6 million in August 2008. It
fell a bit in 2009, then has rebounded back to 22.5 million in November. That's less than a 1 percent decline. This is not an accident; it is the result of
deliberate public policy. ...At some point -- and this already has occurred in much of Western Europe -- public sector spending tends to choke off
private-sector growth. America's current high unemployment levels have been commonplace in much of Western Europe for the last 25 years. The
question now is whether they will become commonplace in the United States in the decade ahead. Friday, January 1, 2010 ~ 2:02 p.m, Dan Mitchell Wrote: Two camps have fought the political and philosophical battle for influence over the economy in the United States for the past 100 years. They differ in
their views over the nature of markets and government. And both are wrong. One camp makes it sound as if markets can do no wrong. ...The
other camp argues, "Markets fail, and that's why we need government." ...In the wake of the financial crisis that gave way to the broader economic
downturn, the advocates of government involvement in the economy are once again on the march and traditional defenders of markets are in retreat.
And so we have seen government advance its role with partial ownership of many big banks, with a take-over of automotive firms, with a large
"stimulus" program, with proposals for cap-and-trade for carbon emissions, and with a major initiative on healthcare. ...Over the past two generations,
a different view of markets and government has begun to emerge, one whose moment may have arrived. It is a view that believes both traditional
camps have overlooked some important aspects of markets. ...This view can be summarized as "Markets fail. That's why we need markets." ...According
to this view, entrepreneurs at work in the economy--in finance, high tech, manufacturing, services, and beyond--are constantly experimenting,
creating new business models, techniques, and technologies that upend the established order of things. Some new technologies and innovations are
genuine improvements and are long-lasting welfare enhancers. But others are the basketball equivalent of pump fakes--they look like the real deal and
prompt market actors to leap hastily into action, only to realize later that their bets were wrong. Given this dynamic, markets are unpredictable,
prone to booms and busts, characterized by bouts of exuberance that are rational or irrational only in hindsight. But markets are also the only
reliable mechanism for sorting out this messy process quickly. In spite of the booms and busts, markets drive genuine long-run innovation and wealth
creation. When governments attempt to impose order on this chaotic and inherently risky process, they immediately run up against two serious
dangers. The first is that they strangle new innovations before they can emerge. Thus proposals for a Consumer Financial Protection Agency, a
systemic risk regulator, a public health insurance plan, a green jobs policy, or any attempt at top-down planning may do more harm than good. The
second danger has to do with the nature of political economy. Politics creates its own kind of innovators who can be as destabilizing to markets as
market actors themselves--but in far more pernicious ways. Economists call these political entrepreneurs "rent-seekers." Rent-seekers gain wealth, not
by creating it, but by channeling it through political favors. Examples include government-sponsored monopolies, "targeted" tax breaks for
special industries, and legislative loopholes inserted by lobbyists. The boom in housing and mortgage securities that ended so badly was fueled by
government policies that were encouraged by rent-seekers in the real estate, home building, and mortgage finance industries. Friday, January 1, 2010 ~ 11:35 a.m, Dan Mitchell Wrote: The government was vague about the steps it was taking, saying that it wanted the security experience to be "unpredictable" and that passengers
would not find the same measures at every airport — a prospect that may upset airlines and travelers alike. But several airlines released detailed
information about the restrictions, saying that passengers on international flights coming to the United States will apparently have to remain in their
seats for the last hour of a flight without any personal items on their laps. It was not clear how often the rule would affect domestic flights. The key question, of course, is whether any of these rules make flying safer. After all, there are real nutjobs out there who want to kill Americans. But as Christopher Hitchens explains, the new rules are bureaucratic nonsense: For some years after 9/11, passengers were forbidden to get up and use the lavatory on the Washington-New York shuttle. Zero tolerance! I suppose it
must eventually have occurred to somebody that this ban would not deter a person who was willing to die, so the rule was scrapped. ...But now fresh
idiocies are in store. Nothing in your lap during final approach. Do you feel safer? If you were a suicide-killer, would you feel thwarted or deterred?
...Why do we fail to detect or defeat the guilty, and why do we do so well at collective punishment of the innocent? The answer to the first question is:
Because we can't—or won't. The answer to the second question is: Because we can. The fault here is not just with our endlessly incompetent security
services, who give the benefit of the doubt to people who should have been arrested long ago or at least had their visas and travel rights revoked. It is
also with a public opinion that sheepishly bleats to be made to "feel safe." The demand to satisfy that sad illusion can be met with relative ease if you
pay enough people to stand around and stare significantly at the citizens' toothpaste. My impression as a frequent traveler is that intelligent
Americans fail to protest at this inanity in case it is they who attract attention and end up on a no-fly list instead. Perfect. It was reported over
the weekend that in the aftermath of the Detroit fiasco, no official decision was made about whether to raise the designated "threat level" from orange.
Orange! Could this possibly be because it would be panicky and ridiculous to change it to red and really, really absurd to lower it to yellow? But isn't it
just as preposterous (and revealing), immediately after a known Muslim extremist has waltzed through every flimsy barrier, to leave it just where it was the day before?
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