Yesterday I posted about Sen. Claire McCaskill’s proposal to legislate a maximum salary. Simple economic logic shows it to be a bad idea.
This bad idea also gets 92% support in a CNN.com poll. Sen. McCaskill must be smarter than I thought.
And far more cynical.
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Posted in Economics, Political Animals, Price and Wage Controls
The economist Hernando de Soto, writing about his native Peru in 1989, makes a point that holds true twenty years later and a continent away. Echoes of F.A. Hayek:
“Those who expect things to change simply because rulers with greater determination and executive skills are elected are guilty of a tremendous conceptual error.”
–The Other Path, p. 237.
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Posted in Executive Power, Great Thinkers, International, Political Animals, Uncategorized
Tagged hernando de soto
The Obama administration has found an innovative way to close the tax gap. Via the satire site Scrappleface:
1. Find a wealthy individual who hasn’t paid their taxes.
2. Nominate him or her to a cabinet-level position.
3. Bad publicity ensues. Taxes are paid.
Best of all, tax evasion is a bi-partisan phenomenon. It’ll work just as well during a Republican administration.
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Posted in Economics, General Foolishness, Taxation
The House stimulus vote did not contain a single Republican “yes” vote. Andy Roth thinks that “Democrats now ‘own’ this massive spending bill.”
Maybe the public will see it that way. If they do, that would be a coup for Republicans, akin to the Clinton health care debacle in 1994. If they succeed in labeling Democrats as the bigger-spending party, they’ll probably gain seats in 2010.
All this political maneuvering got me thinking. The Republicans’ main selling point is that Democrats are unfit to govern. They’re right.
The Democrats’ main selling point is that Republicans are unfit to govern. They’re right, too.
Sometimes I think it’s a real shame that elections have to have a winner.
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Posted in Elections, Political Animals, Stimulus, The Partisan Mind
Tagged 2010 election, andy roth, clinton, democrat, election, election 2010, hillarycare, republican
“We have a bunch of idiots on Wall Street that are kicking sand in the face of the American taxpayer,” says Sen. Claire McCaskill.
One could level the same charge at Congress; but I digress.
Sen. McCaskill was talking about her new bill. It would cap salaries at companies that take bailout money. In a nice bit of symbolism, Wall Street executives would be allowed to earn no more than President Obama’s salary.
Now, suppose that you’re a talented executive who specializes in rehabilitating poorly performing companies. A turnaround artist. Why would you go someplace that would only pay you $400,000? You’ll work somewhere else. The companies that need top talent the most wouldn’t be able to attract it. To do so would be illegal.
Somehow, I don’t see Sen. McCaskill’s legislation helping ailing companies. Or the jobs they provide.
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Posted in Economics, Political Animals, Price and Wage Controls
When taxes are cut and spending isn’t, future taxes go up. It’s the only way to pay off the resulting debt. That’s why the stimulus plan’s tax cut isn’t really a tax cut.
CBO just came out with a number for this future tax increase: $347 billion. (Hat tip to Katherine Mangu-Ward)
Wait, hold on a minute. I missed something. Actually, that’s just the interest payments on the debt from the stimulus package.
Just the interest payments. $347 billion.
Wow.
That’s going to be a pretty big drag on the economy. Maybe this stimulus isn’t such a good idea.
Tim Geithner was confirmed as Treasury Secretary today. He’s been dealing with a scandal lately over unpaid taxes. That’s probably why the Senate’s confirmation vote for him was the narrowest for a Treasury Secretary in over 60 years.
Here’s what’s troubling. I haven’t heard a peep about Geithner’s stances on the issues, or his qualifications for the job. This despite being a bona fide news-hound.
What does Geithner plan to do as Treasury Secretary? Who knows? All we hear is unpaid taxes this, unpaid taxes that. Who cares! Of course he should pay what he owes. It’s a good way to stay out of jail.
But late tax payments have little to do with whether or not Geithner is a good fit for his new job.
That’s the kind of news I’d like to see. How sad that that’s precisely the kind of coverage that would lose the ratings race, and hence we do not see.
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Posted in Media, Political Animals, The Partisan Mind
Christina Romer and Jared Bernstein’s January 9 report on “The Job Impact of the American Recovery and Reinvestment Plan” marshals an impressive array of theory and data in support of President Obama’s stimulus package.
Some of their tax analysis seems suspect, though. On page 5 they write, “tax cuts only have effects [on employment] when people go out and spend money.” Sounds reasonable enough. If people don’t spend money, they save it. And people save most of their tax cut windfalls.
But the only way for saved money to have no effect on the economy is to keep it under a mattress. And very few people do that.
Most people save their money in a bank. Or they invest it. The banks spend the money by lending to businesses and homebuyers. They in turn spend the money on their own projects. Companies receiving investment funds spend the money on salaries, capital, and so on. Saved money is still spent, you see. Just by different people.
There is no reason for saved money to create fewer jobs than spent money. Different jobs, certainly. But more or fewer? No compelling theory points in either direction. It depends on what it’s spent on.
The long-run effects of tax cuts are a little trickier. The stimulus package will increase spending. Deficits, too. So really, the tax cut… isn’t. Deficits have to be paid back. That requires higher future taxes. Lower taxes now mean higher taxes later.
Higher government debt also crowds out private investment. Every dollar that investors put in government bonds is a dollar not invested in the private sector. Hard to tell what the net employment effects are. Depends on what the investment opportunities are.
Maybe the stimulus package is a good idea. Maybe it isn’t; I have a strong hunch it isn’t. As regards tax policy, Romer and Bernstein’s report sheds little light.
Maybe President Obama really does believe that he can change Washington. Let us laud his intentions while smiling at his naivete. He’ll learn.
His first learning experience is happening right now. Obama has pledged that his stimulus package would be pork-free. All $825 billion of it.
But Washington does not work that way. President Obama’s earmark ban is only one more rule for lobbyists to circumvent; rules are made to be broken. This morning the AP reports that lobbyists are quick learners.
Washington’s Iron Triangle works like a balloon. President Obama is pushing down on one end of it. But the amount of air inside stays the same; it simply moves to the other end of the balloon.
Obama’s earmark ban may actually have an unintended negative consequence. Earmarks won’t go through the usual channels, where it’s easy to keep an eye on them. They will be forced underground. Less transparent. More secretive.
In this case, banning pork could mean more pork. A paradox. But it’s how Congress works.
Good luck to you, President Obama, in your fight against earmarks. You’ll need it. Just don’t expect very much to, ahem, change.
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Posted in Earmarks, Political Animals, Spending
Immigration is not always the clearest of issues. Just watch the talking heads on the tv. Both sides have the maddening tendency to claim the same argument as their own — “I am for legal immigration, and against illegal immigration.”
Sounds reasonable enough. That’s probably why so many people say it in the first place. But where does that kind of thinking take us?
The quota on H1-B visas for highly skilled workers is currently 65,000 per year. Remember the pro-legal, anti-illegal argument. That requires being for 65,000 visas, and against 65,001 visas. Think about that for a minute. Isn’t that weird? 0.0015% is the difference between saying yes and no.
It gets stranger. Congress constantly changes the definition of “legal immigration.” Restrictions are tightened in one bill. Loosened in the next. Do people then change their mind every time Congress passes new immigration legislation?
This is not a rigorous line of thought. That’s why I don’t think very many people actually think that way, even if they say they do. Most people have some optimum immigration level they’d like to see. This is where the real immigration debate lies.
My preference is on the high side. For a lot of reasons, I favor letting in more immigrants. Morally and economically, in my heart and my head, that is what I believe to be right.
Others would prefer to have fewer immigrants. They have their own reasons, just as sincerely held.
Being for legal immigration and against illegal immigration may sound sane and pragmatic. Really, it is neither. It reduces a debate over the well-being of millions to semantics.
Combatants in the immigration debate should base their opinions on what they feel is just. Not on whatever happens to be legal this year.
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Posted in Argumentation, Immigration, International, Media, Philosophy
Inertia Wins! 