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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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…But conservative critics are missing the conflict at the heart of the movie. It's quite possible that Cameron missed it too. Monday, February 8, 2010 ~ 11:44 a.m., Dan Mitchell Wrote: A Queens teacher who collects a $100,000 salary for doing nothing spends time in a Department of Education "rubber room" working on his
law practice and managing 12 real-estate properties worth an estimated $7.8 million, The Post found. Alan Rosenfeld hasn't set foot in a classroom for nearly a decade since he was accused in 2001 of making
lewd comments to junior-high girls and "staring at their butts," yet the department still pays him handsomely for sitting on his own butt seven
hours a day. ...The DOE can't fire him. "We have to abide by the union contract," spokeswoman Ann Forte said. So Rosenfeld simply collects his
$100,049 salary -- top scale for teachers -- plus full health benefits and the promise of a fat pension, about $82,000 a year if he were to retire
today. His pension will grow by $1,700 each year he remains. He could have retired at age 62, but he stays. He has also accumulated about 435
unused sick days -- and will get paid for half of them when he retires. Sunday, February 7, 2010 ~ 5:49 p.m., Dan Mitchell Wrote: Newfoundland and Labrador Premier Danny Williams is set to undergo heart surgery this week in the United States. CBC News confirmed Monday that Williams, 59, left the province earlier in the day and will
have surgery later in the week. The premier's office provided few details, beyond confirming that he would have heart surgery and saying that it was not necessarily a routine procedure. Sunday, February 7, 2010 ~ 3:11 p.m., Dan Mitchell Wrote: The Obama Administration claimed that spending more money would keep the unemployment rate below 8% in the United States, yet it climbed to 10%. The United Kingdom and Canada also suffered
continued stagnation after adopting so-called stimulus packages. Ironically, statist nations such as France and Germany that resisted the siren song of Keynesianism better weathered the global economic storm.
...While many factors influence economic performance, the negative impact of government spending is one reason why small-government jurisdictions such as Hong Kong (where the burden of the public sector is
below 20% of GDP) have higher growth rates than nations that have medium-sized government, such as Canada and the United States. The same principle explains in part why big-government countries such as
France often suffer from economic stagnation. ...Most studies using current economic data show that economic performance is maximized when the public sector is less than 20% of GDP. And if historical data is
used, the evidence suggests that government should be even smaller. Ironically, John Maynard Keynes might not be a Keynesian if he was alive today. He certainly would not be a proponent of big government. In
correspondence with another British economist, he agreed with the premise of "25% [of GDP] as the maximum tolerable proportion of taxation." Saturday, February 6, 2010 ~ 7:21 p.m., Dan Mitchell Wrote: Ronald Reagan was born 99 years ago on this date.
The tribute is moving, but this video underscores what made Reagan special. Unlike most Republicans today, he actually believed in freedom.
Friday, February 5, 2010 ~ 5:55 p.m., Dan Mitchell Wrote: The phrase "too big to fail" has entered into our everyday vocabulary. It carries the implication that really large, complex and highly interconnected financial institutions can count on public support at
critical times. The sense of public outrage over seemingly unfair treatment is palpable. Beyond the emotion, the result is to provide those
institutions with a competitive advantage in their financing, in their size and in their ability to take and absorb risks. ...To meet the possibility that
failure of such institutions may nonetheless threaten the system, the reform proposals of the Obama administration and other governments point to the need for a new "resolution authority." Specifically, the
appropriately designated agency should be authorized to intervene in the event that a systemically critical capital market institution is on the brink
of failure. The agency would assume control for the sole purpose of arranging an orderly liquidation or merger. Limited funds would be made available to maintain continuity of operations while preparing for
the demise of the organization. To help facilitate that process, the concept of a "living will" has been set forth by a number of governments. Stockholders and management would not be protected.
Creditors would be at risk, and would suffer to the extent that the ultimate liquidation value of the firm would fall short of its debts. To put
it simply, in no sense would these capital market institutions be deemed "too big to fail." What they would be free to do is to innovate, to trade,
to speculate, to manage private pools of capital — and as ordinary businesses in a capitalist economy, to fail. Friday, February 5, 2010 ~ 2:46 p.m., Dan Mitchell Wrote: Since December 2007, when the current downturn began, the ranks of federal employees earning $100,000 and up has skyrocketed. According to a recent analysis by USA Today, federal workers making six-figure
salaries - not including overtime and bonuses - "jumped from 14 percent to 19 percent of civil servants during the recession's first 18 months.'' The surge has been especially pronounced among the highest-paid
employees. At the Defense Department, for example, the number of civilian workers making $150,000 or more quintupled from 1,868 to 10,100. At the recession's start, the Transportation Department was
paying only one person a salary of $170,000. Eighteen months later, 1,690 employees were drawing paychecks that size. All the while, the federal government has been adding jobs at a 10,000-a-month clip.
Between December 2007 and June 2009, federal payrolls exploded by nearly 10 percent. "Federal workers are enjoying an extraordinary boom time in pay and hiring,'' USA Today observes, "during a recession
that has cost 7.3 million jobs in the private sector.'' And to add public-sector insult to private-sector injury, data from the Office of Personnel Management show the average federal salary is now roughly
$71,000 - about 76 percent higher than the average private salary. Thursday, February 4, 2010 ~ 10:19 a.m., Dan Mitchell Wrote: After the administration floated a plan to cap non-defense, non-security discretionary spending for the next three years, the opposition party
erupted in jeers. The complaints were many: It affected only one-eighth of the budget, it came on top of big increases, and the savings would be
trivial next to the deficits that are in the pipeline. ...All the criticisms, as it happens, are true. Obama's claim of stern fiscal discipline -- "we are
prepared to freeze government spending for three years" -- collapsed into comical irrelevance as soon as he listed all the programs that won't
be included: national security, Medicare, Medicaid and Social Security, which happen to be the Four Horsemen of the Fiscal Apocalypse. There's more: Unspent stimulus funds amounting to $165 billion. Other
"mandatory" programs like unemployment and food stamps. Interest on the debt, which will triple in the next three years. Obama is going on a hunger strike, except during mealtimes. ...Still, it's odd to hear
complaints about excessive spending from the people who brought us the bloated budgets of the Bush years. During his tenure, federal spending
did not retreat under the relentless assault of tight-fisted conservatives. In fact, during the Bush administration, total federal spending, adjusted
for inflation, climbed by 72 percent. What was originally a fiscal surplus became a deficit, reaching $1.8 trillion in 2009, Bush's final budget year
(to which Obama contributed only a minor amount). Not until he had been in office for more than six years did he veto a bill because it cost
too much. Bill Clinton may feel your pain, but next to his successor, he looked like Ebenezer Scrooge. ...If the GOP really wants to highlight the
administration's budgetary excesses, the right response is not to merely ridicule how little he offers in the way of savings, but to offer bigger and
better savings of their own. Otherwise, they may find that the public disgust with runaway spending can scorch incumbent Republicans as well as incumbent Democrats. Thursday, February 4, 2010 ~ 9:23 a.m., Dan Mitchell Wrote: Any expectation that state and local governments would use the worst fiscal crisis since the Great Depression to reduce their biggest expenditures is proving to be wishful thinking. Companies have cut 7.3
million jobs, 6.29 percent, since business employment peaked at 115.8 million in December 2007. State and local governments kept adding jobs through August 2008 to 19.8 million and have since cut 132,000
positions -- 0.66 percent, according to the U.S. Labor Department. ...Reducing headcount would help narrow budget deficits. It would also reduce public-pension liabilities, which analysts say threaten state and
local credit ratings and even, at the local level, solvency. State and local government pensions nationwide are underfunded by about $1 trillion,
Orin S. Kramer, chairman of the New Jersey Investment Council, which oversees the state's pension fund, estimated in November. That doesn't
include other retirement benefits, such as health care, which Standard & Poor's earlier this year pegged at about $500 billion for the states alone. Wednesday, February 3, 2010 ~ 6:14 p.m., Dan Mitchell Wrote: The Obama administration is considering several steps that would review the legality of the controversial Bowl Championship Series, the Justice
Department said in a letter Friday to a senator who had asked for an antitrust review. In the letter to Sen. Orrin Hatch, obtained by The Associated Press, Assistant Attorney General Ronald Weich wrote that
the Justice Department is reviewing Hatch's request and other materials to determine whether to open an investigation into whether the BCS
violates antitrust laws. "Importantly, and in addition, the administration also is exploring other options that might be available to address
concerns with the college football postseason," Weich wrote, including asking the Federal Trade Commission to review the legality of the BCS
under consumer protection laws. ..."The administration shares your belief that the current lack of a college football national championship
playoff with respect to the highest division of college football ... raises important questions affecting millions of fans, colleges and universities, players and other interested parties," Weich wrote. Wednesday, February 3, 2010 ~ 2:45 p.m., Dan Mitchell Wrote: …government employees of all stripes have manipulated the system to spike their pensions. The old deal seemed fair: public employees would earn lower salaries than Americans working in the private sector, but
would receive a somewhat better retirement and more days off. Now, public employees get higher average pay, far higher benefits, and many more days off and other fringe benefits. They have also obtained greatly
reduced work schedules, thus limiting public services even as pay and benefits shoot ever higher. The new deal is starting to raise eyebrows,
thanks to efforts by groups such as the California Foundation for Fiscal Responsibility, which publishes the $100,000 Club, a list of thousands of
California government retirees with six-figure, taxpayer-guaranteed incomes. The story doesn't end with the imbalance in pay and benefits. Government workers also enjoy absurd protections. The Los Angeles
Times published a recent series about the city's public school district, which doesn't even try to fire incompetent teachers and is seldom able to
get rid of those credibly accused of misconduct or abuse. The real scandal is a two-tier society where government workers enjoy benefits far in excess of those for whom they supposedly work. It's past time to
start cleaning up the mess by reforming retirement systems and limiting the public unions' power. Tuesday, February 2, 2010 ~ 7:27 p.m., Dan Mitchell Wrote: But the most important numbers in the budget documents are the estimates of what is happening to government spending. The good news is that burden of government spending is projected to decline over the next few years from about 25 percent of GDP to less than 23 percent of GDP. That's the good news. The bad news is that federal government outlays only consumed 18.2 percent of economic output when Bush took office. In other words, notwithstanding the good news cited above, the size and scope of government has increased dramatically since 2001. The worse news is that the long-run spending forecasts show a cataclysmic expansion in the burden of government. The "optimistic" estimate is that the federal government will consume more than 30 percent of GDP by 2050 and 40 percent of GDP by 2080. Tuesday, February 2, 2010 ~ 7:12 p.m., Dan Mitchell Wrote: There's a recession going on, but you wouldn't necessarily know it by looking at public employee earnings. If you work for the government,
you're far less likely than your private-sector counterparts to have been laid off in the recession, and you probably also saw relatively fast wage
growth. ...During the recession, public employees have done better than private ones on two measures: total employment and hourly compensation. Over the last two years, private payrolls shed 7.3 million
jobs, but public sector civilian employment actually grew very slightly, adding 98,000 jobs. ...public sector compensation (as measured by the
Department of Labor) rose 42% faster than private sector compensation over the last three years. Since the end of 2006, hourly total compensation (wages plus benefits) has risen 6.5% for private sector
workers, essentially keeping pace with inflation. But state and local government workers saw their hourly compensation rise 9.2%. Federal civilian workers (about 10% of the public sector civilian workforce) are
excluded from the above measure, but they did even better, receiving Congressionally-approved wage rises totaling 9.9% over the same period. ...If states and localities had kept pace with private sector wage
growth over the last three years, state budget gaps would be approximately $36 billion less than they are today. Tuesday, February 2, 2010 ~ 3:45 p.m., Dan Mitchell Wrote: When it comes to hiring staff, there are plenty of legal pitfalls employers need to watch out for these days. So recruitment agency boss Nicole
Mamo was especially careful to ensure her advert for hospital workers did not offend on grounds of race, age or sexual orientation. However,
she hadn't reckoned on discriminating against a wholly different section of the community - the completely useless. When she ran the ad past a
job centre, she was told she couldn't ask for 'reliable' and 'hard-working' applicants because it could be offensive to unreliable people. 'In my 15
years in recruitment I haven't heard anything so ridiculous,' Mrs Mamo said yesterday. 'If the matter wasn't so serious I would be laughing out loud. 'Unfortunately it's extremely alarming. I need people who are
hardworking and reliable - and I am pleased to discriminate in that way. If they're not then I really can't use them. The reputation of my business
is on the line. 'Even the woman at the jobcentre agreed it was ridiculous but explained it was policy because they could get sued for being discriminatory against unreliable people. ...She filed the advert for a
£5.80-an-hour domestic cleaner at a hospital in Bury St Edmunds, Suffolk, through the Jobcentre Plus online service last Thursday. However, when she rang the nearest branch in Thetford, Norfolk, to
make sure details would be available to jobseekers who turned up in person, she was transferred to a woman who said the wording was unacceptable. Monday, February 1, 2010 ~ 7:51 p.m., Dan Mitchell Wrote: ...former Treasury Secretary Henry Paulson on Wednesday defended his decision to complete a $182 billion bailout of American International Group Inc., arguing that the unemployment rate would have risen easily
to 25% without the bailout. "If the system had collapsed millions more in savings would have been lost," said Paulson, who was Treasury
Secretary at the time of the bailout, at a hearing. "Industrial companies of all size would not have been able to raise funding and they would not
have been able to pay employees, this would have rippled through the economy." For the sake of argument, let's assume he is right and that the economy would have collapsed without huge amounts of money being pumped into the financial system.
Does that justify Paulson giving money to his friends on Wall Street? Not at all. The crowd in Washington could have used what's known as the FDIC-resolution
approach, which would have resulted in the government paying healthy financial institution to take over the insolvent ones. In effect, this is what happened during the
savings & loan crisis twenty years ago. It's not an ideal libertarian solution since tax dollars are pumped into the financial system and there is some degree of increased
moral hazard since consumers/customers have less reason to monitor the safety and soundness of the banks they patronize. But the FDIC-resolution approach has one
enormously good feature, at least compared to the Bush-Paulson-Obama-Geithner bailout: Bad banks are shut down, meaning that shareholders lose all their money and senior managers lose their jobs. Monday, February 1, 2010 ~ 5:00 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." Monday, February 1, 2010 ~ 2:36 p.m., Dan Mitchell Wrote: It looks like Oregon corporations and high-income earners will pay higher state taxes as voters weighed in Tuesday on two hotly debated measures. ...Measure 66 raises the income tax paid by households
earning at or above $250,000 a year or individual filers who make $125,000 or more. Measure 67 raises the state's $10 minimum corporate income tax. ...The tax measures were strongly supported by the state's
teachers and other public employee unions. ...Pat McCormick, spokesman for the opposing campaign, "Oregonians Against Job-Killing
Taxes" described the results as "disappointing and discouraging." 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. 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. 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. 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. 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. 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. 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, 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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