Obama on Taxes

A few thoughts on Obama's press conference yesterday...

He continues to insist that the "rich" must have their taxes increased. By rich, he means those making over $250,000 per year, but he usually refers to "millionaires and billionaires" in an effort to stir up class warfare. It's much easier to get people riled up about Wall Street "fat cats" than small business owners who create most of the jobs in America. He doesn't seem to grasp that 1) the rich already pay the lion's share of taxes (while the lower 50% of earners pay almost nothing), 2) the rich are those who employ people, invest, and spend, all of which are necessary for a growing economy, and 3) the rich will alter their behavior in the face of higher taxes.

For anyone skeptical of the third claim, I offer as evidence the luxury tax that was enacted in 1990 on various toys of the wealthy, including yachts, airplanes and jewelry. The Joint Committee on Taxation estimated that revenues from the luxury tax in 1991 would be $31 million. It turned out to be about $16 million. Why? Wealthy folks changed their behavior in response to the new tax.

An excerpt from a George Will article in 1999: "According to a study done for the Joint Economic Committee, the tax destroyed 330 jobs in jewelry manufacturing, 1,470 in the aircraft industry and 7,600 in the boating industry. The job losses cost the government a total of $24.2 million in unemployment benefits and lost income tax revenues. So the net effect of the taxes was a loss of $7.6 million in fiscal 1991, which means the government projection was off by $38.6 million." In other words, the luxury tax was only a minor nuisance to the wealthy, but a lot of middle class people got hurt by the attempt to stick it to the rich.

Incredibly, government agencies still use the static analysis which led to such lousy predictions 20 years ago.

He repeated the canard that oil companies need to have their "subsidies" ended. But, there is no such thing as a subsidy for oil companies.  (See my post on May 6 below).  I cannot really blame Obama for continuing to repeat this lie. He is, after all, a politician trying to get reelected. The blame lies with the public, too many of whom can't be bothered to do their homework.

Obama laid the blame for our debt problems not only on Republicans, but Congress in general, saying that they "ran up this bill." Well, Congress deserves a lot of blame, but Obama essentially absolved himself of any responsibility. He basically said "Hey, don't blame me for this mess! Congress did it!" I've never taken a course in leadership, but I'm pretty sure that passing the buck is not one of the lessons.

Obama is, by all accounts, a very smart guy. Why then is virtually every economic policy he pursues precisely the opposite of what should be done? Is he actually not that smart? Or does ideology override his intellect?

The Ice Man Cometh?

The Little Ice Age (LIA) occurred from roughly 1300 to 1850. The coldest part of the LIA, from 1645 to 1715, was also a period of very low sunspot activity, known as the Maunder Minimum.

I bring this up because three independent studies were released yesterday, each predicting that in the next solar cycle, beginning sometime in 2013, sunspot activity "may be going into hibernation", as put by a spokesman for the National Solar Observatory. Sunspot activity is predicted to be at its lowest level since the Maunder Minimum.

Some scientists are openly wondering whether this phenomenon could hint at the coming of another LIA. Others say not so fast, increasing levels of CO2 could offset any cooling that may occur. But from what I've read, they are all paying very close attention to what is going on with the sun. As National Geographic put it: "A prolonged lull in solar activity has astrophysicists glued to their telescopes waiting to see what the sun will do next—and how Earth's climate might respond." Wow. Sounds like they're concerned. Maybe the climate is going to do whatever it does regardless of what mankind does.

So, is the world going to end in fire or ice? Beats me. And apparently it has a lot of scientists baffled. But starting today, I'm going to do every thing I can to increase my carbon footprint and my methane footprint. Golf balls go farther on hot days than on cold ones.

Minimum Wage and the War on Poverty

The link below is worth a look. Walter Williams discusses how it could be that America has spent trillions to help the poor since Lyndon Johnson declared a "War on Poverty" in the 1960's, yet poverty rates are about the same today. He also talks about the debilitating effects of minimum wage laws. It is astounding that a very high percentage of Americans support minimum wage laws.  People cling to that belief no matter how much data to the contrary confronts them.

Walter Williams and the War on Poverty