The Steamboat Pilot & Today

Scott Wedel
October 12, 2008 at 11:50 p.m.
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Some of us remember that in order to avoid paying the 70% tax rate for the highest income bracket that almost no one actually paid that much because tax shelters were very common. There were tax shelters that made no economic sense, there were tax shelters that expected to loss 100% of the money invested, but that the tax shelters could reduce the person's income tax by more than what was spent on the tax shelter.

Thus, the Laffer Curve was plausible when the tax rates were so high that:
1) it was reasonable to claim that some people chose to earn less because they got relatively little of the money they made above $1 million (or wherever the top marginal tax rate took effect)
2) there was a large amount of time and effort spent on tax shelters designed solely to offset earned income (as compared to tax shelters that earn tax free money).
3) and when #1 or #2 is true then money is not being invested in good businesses or ideas, but being wasted on whatever results in the biggest tax write offs which reduces the amount of taxes paid and is economically inefficient.

I would argue that by monitoring the use and demand for tax shelters that it is then possible to determine if the current top tax rates are too high. On that basis, I think it is clear that the current tax structure is not too expensive for the top earners. And thus any lowering of the taxes being paid by the rich will not result in more taxes paid or increased economic efficiency.

Steve Lewis
October 13, 2008 at 3:32 p.m.
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This will be an interesting debate in America, as much of what Scott F. writes was repeated on several programs over the weekend. Scott W. you make an interesting point about possible tax levels.

Yes, deficit spending and its easy credit has hurt us. But at this point we have critical investments to make in energy, health care and infrastructure. Without those our future will suffer. More deficit spending is coming.

We probably agree that tight credit is the new paradigm in our country. The same may be true in much of the globe. Our deficit spending habits may be reformed not so much by us as by those countries less able/willing to lend to us.

JLM
October 13, 2008 at 9:48 p.m.
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I hate to dilute a really good rant with any facts but you might want to take a look at John Kennedy's tax cuts (who by the way was a Democrat) and the impact on tax revenues actually collected by the Federal government. In addition, you might want to take a look at “bea.gov” and look at the actual tax collections, rather than relying on talking points, deadbolt.

Make no mistake – tax cuts result in increased Federal tax revenues.

How about this for a change? Let's elect an inexperienced lightweight corrupt nitwit from the Chicago machine and have him RAISE taxes on the most productive element of society?

I guess that is really going to stimulate tax collections, eh?

You might want to take a look at Dem Gov Grantholm's brilliant tax increases in Michigan which took a $300MM deficit, raised taxes $600MM and resulted in – guess what – another $300MM deficit. Of course, that would require dealing with actual facts rather than some fantasy world.

When the wealth and earning power of America is unleashed, tax revenue at the Federal level increases.

You think you have budget problems in River City just now? Wait until all the wealthy folks cut out one stinkin' vacation a year, rube. It's gonna get ugly out there for anybody who is depending on the partonage of wealthy folks and their disposable income.

Where is it going to go? To Obama's ill fated tax increase scheme. Of course, I could be wrong, maybe all the guys who are earning $30,000 per year and think there will actually be a “wealth distribution dividend” will decide to blow $6,000 on a week of skiing in SBS anyway.

This is not a dopey Michael Moore movie or a Keith Olberman “countdown”. Vote the wrong way and you will see just how the economy really works in SBS.

How do you cut taxes when you just whizzed away $700B on bailing out Wall Street?

That sucking sound, that's your tax cut going for the third lap around the toilet bowl.

Get a grip on reality. Cause reality's got a grip on you!

JLM
October 13, 2008 at 10:08 p.m.
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Just one more little point of order – BHO proposes to increase the capital gains rates as a means of funding his massive $1.5T (that's trillion) new spending program. Hey, that could work, right?

He wants to increase it from 15% to 28%.

Think that's going to work? Inquiring minds want to know, eh?

You may have noticed that the Dow Jones Industrial Average has been a bit frothy of late having slid down just a tad from about 14,000 just last year to about 8400 yesterday and about 9300 today (the greatest increase in the history of the Dow).

Where the heck are the “capital gains” – which are going to be taxed so effectively – going to come from?

Check your next brokerage statement closely and I would be willing to bet you have incurred a wee loss of late. Do you see any capital gains lurking there amongst the red ink on your brokerage account statement?

Well, last time I checked the math worked like this –

15% x zero = $0
28% x zero = $0

Now, I also suspect that a thoughtful taxpayer might want to take his “capital losses” at year end 2008 – cause the market has delivered about $8T (that's trillion) in capital losses thus far. Of course, capital losses can be subtracted from capital gains before tax liability is calculated. This means that there will have to be $8T of untaxed capital gains to offset the capital losses before the first stinkin' penny of additional tax revenue will be collected at any tax rate.

Hmmmmm, that seems a bit unlikely to me. But that could just be me, no?

So, I guess we'll be relying just a bit more on closing all those corporate loopholes and eliminating all those wasteful government programs to fund the Big O's flights of fancy.

Even the O cannot make chicken salad out of chicken excrement.

Grow the heck up, that ain't hot coffee dribbling down your leg, pal! Really, really, how stupid are we? For me, I'm not that stupid – but, hey, it could just be me, no? Sheesh!

knee_dropper
October 13, 2008 at 10:13 p.m.
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Maybe your tax cut's circling the bowl JLM, but anyone making less than $250,000 a year is getting a cut. And yes, I think a family earning a quarter million a year can afford a vacation or two. Your threats of voting the “wrong way” sound desperate and your petty insults aren't going to win any converts. Even McCain has said that Obama is a “decent person and a person that you do not have to be scared of as president of the United States.” Why don't you enunciate your candidates propositions and how he plans to fix the economy instead of relying on smears to try and scare people to vote for McCain.

JLM
October 13, 2008 at 10:43 p.m.
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Actually, my candidate is a chap named Common Sense. Unfortunately, he is not actively campaigning this year.

Believe me, neither John S McCain nor Barrack H Obama are going to be able to deliver on any tax cut promises of any kind whatsoever cause we are only at the “beginning of the beginning” of the economic problems with which we are going to wrestle.

What's next?

Credit card debt default rates which will dwarf mortgage default rates. Which bill do you think folks pay first – home loan or credit cards? Of course, mortgage loans don't let you just pay the interest and roll the principal, do they?

Then, the American auto makers are going to simply melt. Just wait until end of year sales fall flat. You did notice that automobile sales were down by about 30% last month – pre Wall Street's problems – did you not? The car makers will be dropping off cars in people's driveways hoping they don't return them.

Think anybody in corporate America is going to get a Christmas bonus this year? Not bloody likely!

Unemployment will be 9% by year end. Did you catch Bill Gates's prediction in his address at Harvard today? This guy runs one of the largest technology firms on the planet and knows more about the economy than the Fed. He says 9% – that is going to be very, very nasty.

You really think somebody making $250K is not going to tighten their belts a bit – hey, their freakin' taxes are going up more than the cost of two weeks in SBS but you think they are still going to come? You might want to check with the Chamber and get a gander at flight bookings coming into the Yampa Valley as a leading indicator.

Who do you think has taken the biggest hit on their stock portfolio? The guy down at convenience store? No, it's the $250K guys. What kind of mood do you think a guy is in when he sees 20 years work evaporate overnight? He's going to Mexico and drink Corona on the beach.

If a guy took 3 skiing vacations in SBS last year, he's taking 1 this year. Want to bet your livelihood on it? Ooops, my bad, you already did, didn't you?

Nobody gets out of life alive and nobody is goiing to be untouched by this economic mess.

Jimmy Carter (well, maybe before he became an apologist for the PLO) was a very, very decent guy – a truly incompetent President and the weakest leader to have ever set his fanny down in the Oval Office.

Barack Obama is a dope smoking, street hustler from Chicago who tapped into the American Dream of affirmative action – more power to him in my book – and has parlayed it into a highly improbably run to the Democratic candidacy for President. He is a naif, a truly clueless corrupt product of the Chicago political machine. He is lightning in a bottle and even he knows it.

I default to McCain because his opponent is a nitwit not because McCain is a genius. At least an honest guy might have a chance. But, hey, that's just me and my penchant for reality.

windle
October 14, 2008 at 7:28 a.m.
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Hey, Ace, You brought up the nitwit card.. What about McCain's running mate. Should McCain suffer a stroke, heartattack or whatever, Palin would be Pres. (in the very unlikely event McCain is elected). What are her thoughts on how the economy will recover? What are her unscripted thoughts on anything, for that matter (not taking her belief in the Rapture and how this would play when considering her goals for the future of the USA, into account). I suggest you GOOGLE palin steve stoll. As I say, whatcha got to lose.

JLM
October 14, 2008 at 11:04 a.m.
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Hmmm, rocket scientiest, so – your #1 guy is a nitwit and your bid is that “if, perhaps, it could happen, maybe it might could sorta happen” – Sarah Palin is a nitwit? A bit too much subjunctive case for me.

You have a very weak lead and we're playing trump.

I guess I go with the certainty that Obama is a naif, a fakir, a poseur and, for sure Dude, a nitwit.

Look, Obama is simply not qualified to be President – not from the perspective of governing experience, not by the quality of his ideas, not by the composition of his character and not by the nature of his associations.

In actuality, Sarah Palin is the only candidate in the race with actual governing experience. The only one who has ever actually made a life and death executive decision. Sure, you don't like her because she's a prom queen kind of winner and those kind of folks make you very uncomfortable. It's OK. Sometimes you really do get the beautiful girl.

I guess I would rather fly with a pilot who has only flown for two years than be on a plane with a chap who has never even taken off. It's the landings I worry about.

But, hey, that's just me! I am just hung up on reality cause I live in the real world.

Steve Lewis
October 14, 2008 at 3:39 p.m.
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When it comes to who best to lead us through several very, very serious problems, my vote could sway from my principles toward smarts. Maybe if I saw McCain exibiting superior mental agility and clear stances on the economy. Its not simple coincidence to find I'm also voting with the guy able to graduate in the top of his class, Obama, vs. the guy who graduated at the bottom, McCain.

I also don't like McCain's belief that we should have stayed and won Vietnam. At what cost in lives, treasure, dividing the country? For what gain? For military honor. I respect military service, but this is the wrong soldier to have as our commander in chief.

Still waiting for JLM to say one positive word about his choice McCain amidst his railing on Obama for taxing the very wealthy. With such idealogy on taxes leading your choice JLM, its interesting that you ignore Reagan was the Pres who allowed national debt to really start growing.

JLM
October 14, 2008 at 5:02 p.m.
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You will get no argument from me that John S McCain is as dumb as dirt. You must not be able to read if you think I am fond of McCain – I only dig McCain by default. Elections are binary – once you award one guy the “zero” the other guy gets the “one” by default.

It gets down to “smart, devious, corrupt, unprincipled, inexperienced” v “dumb, honest, experienced” – or another way of saying it is “naif, fakir, poseur” v “just smart enough.”

As a trade schooler (that's how Academy grads refer to themselves, it's a secret code) myself, I can tell you you want someone with more than a passing familiarity with the military in charge for right now – we have a couple of unresolved wars just now, don't we? Even if it is a Squid (that's what grunts call Navy guys).

Make a couple of bad moves and the Volunteer Army is going to collapse – but then again you might like the idea of a military draft, no? Who's going to fight our wars? acorn? lol

So, just now, we need someone who knows how to handle the military. Awkward to state the obvious –- McCain was way “smart enough” on the surge, now wasn't he? And, O was the goat that day, no?

The VN War was a stupid war fought on a premise fabricated by LBJ. The Gulf of Tonkin Incident never happened. The Congress was stupid to go along with it. Eisenhower told JFK not to get involved but if he did to “win it.” JFK never committed to victory. Sound familiar?

I don't know where you are getting your info but everybody in the military in 1972 knew the war was lost. Nobody hates war like a soldier (even a Squid) who has seen one up close and personal. It is the most obscene waste of human potential ever conceived. It is always proof of the most abject failure of mankind.

Nonetheless, you have to be pretty good at them because consistently coming in second creates a whole new set of problems. We need to win these three in Iraq, Afghanistan and terror. The Iranians are going to need some love soon.

Go take a look at GDP, national debt, national debt as a % of GDP and the Dow Jones graph and tell me if you wouldn't kill for just a bit of old RWR just now? Oh, yeah, the guy had just a bit to do with winning the Cold War in his spare time. Damn, I miss Ronald Reagan.

Don't worry about the new President's tax cut and spending plans – all the money has been committed to bailing out Wall Street. There is going to be no tax cuts. They're called “campaign” promises for a reason. Once the campaign is over, they expire.

Go ahead and vote for Obama and see how bad the economy can really get. Just what we need is for all the rich folks to stop spending money just now when the local economy is showing a few cracks around the edges. Cutting the City budget by 15% will be a walk in the park compared to next year – 50% cuts here we come.

knee_dropper
October 14, 2008 at 6:05 p.m.
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Since you seem to stick to the right wing talking points that “ole tax raising” Obama's gonna raise everyones taxes cause he hates America. How about four more years of Bush, do you think we can take four more years of the GOP's agenda? After several years of republicans running the both the legislative and executive branches, the wheels have fallen off the car and now it's on fire. True, the Dems haven't done much in the past two years, but they haven't gotten a filibuster proof majority yet. McCain used to have my respect as someone who spoke his own mind, but that's gone out the window during this election. His pandering to the far right has shown no matter what he believes is right doesn't matter anymore, he's got to try and placate the right wing since he's their representative. If you don't like McCain and live in such a black and white world, why don't you vote for the libertarian candidate. Maybe if enough of you entrenched republicans show your disgust with the candidates, the GOP will hear you out next time. As far as national prosperity is concerned, why don't you take a look ten years back, JLM? I do believe that the country was a wee bit better off and the national debt was actually starting to get paid down. I believe that president was elected during a recession and that democrat president didn't totally wreck the economy, eh? The question is, has the direction the country been heading in the past eight years been working out for us, or do we need to change course?

JLM
October 14, 2008 at 6:49 p.m.
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I don't think for a second that Obama hates America. His is a life story that could only be written in America. I suspect every morning he gets down on his knees and thanks God that he was born in the good old USA and that he was able to be educated at the best universities in America on affirmative action. I applaud a country that could make such a thing happen.

I only disagree with Obama on issues, judgement, experience, character and integrity. He is a wonderful runway model and he speaks with great eloquence and not an ounce of sincerity. As a guy, he's a charming, telegenic naif, fakir and poseur.

I agree fully with you that the country was a lot better off ten years ago – when Bill Clinton was in office and there was a Republican Congress to control his spending tendencies. Give credit where credit is due – to both the President and the Congress. Frankly, from an economic perspective that may have been the best balance our Federal government had in some time.

Have no doubt, that Republican Congress created those surpluses. You will recall that the Congress does, in fact, control spending, do you not?

Bill Clinton inherited the last vestiges of the Republican low hanging fruit from RWR and his third term appointee, GHWB. And, he had the wisdom not to mess it up. He was also another smart as a whip guy with no character and integrity. He wasted all his time worrying about lofty and transcendental matters like gays in the military. Oh, yeah, and getting oral sex in the Oral Office. What a dope. LOL

You make a typical naive assessment when you attritube someone's politics to a “party.” I know my mind on the issues of the day. I research and understand the issues. I assess which candidate is most likely to make decisions, support policies, enact legislation with which I would agree. Then I vote for that individual.

The fact that he received the nomination of a particular political party is an organizational fluke. His party is his problem.

I object to Obama's policies of wealth re-distribution. We do not need to create another generation of dependency. I object to Obama's judgments on the surge. He was wrong and his judgments are dangerous. McCain was right. I object to Obama's policies on induced labor abortion, third trimester abortion. All life is sacred. I object to Obama's wholesale corruption related to ACORN, Bill Ayers, Jeremiah Wright, Father Pfleger, Khalid al Monsour and Alexi Giannoulias. I object to his impending abandonment of Israel. I object to his naivete in dealing with Iran.

I think independently. I live free. I eat no other man's food. I ask only to be able to keep a reasonable amount of the wealth that I personally create. When needed, I willingly fought for our Nation. I owe a great debt for the privilege of having been born here and the country owes me nothing. My account has been paid in full, I am an American.

JLM
October 14, 2008 at 6:55 p.m.
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It might be useful to remember that the Democrats have been in control of the Congress since 2006. Remember Speaker Pelosi's promised “first 100 days”? Remember all that great legislation we were promised?

Well, uhh, neither do I because nothing ever happened.

The biggest problems with the Democrats – they simply cannot govern effectively.

The best legislative accomplishment of a recent Democrat? Gays in the military and nobody really knows what the policy really is, do they? LOL

Maybe Obama can get ACORN to run things for the Democrats. Ooops, my bad, they already are. LOL

Give it a rest, Obama is a naif, a fakir, a poseur who represents real danger to our country and our safety. He is not just naive and corrupt, he is dangerous!

stillinsteamboat
October 14, 2008 at 7:30 p.m.
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JLM, It might be useful to remember that the Dems have ONLY been in control since 2006. It took at least 8 years to screw this country up. What's your excuse for the previous 6 years.
I also love the way the GOP is Running from Bush, like he doesn't exist. He must be the lonliest guy in DC.

windle
October 14, 2008 at 7:56 p.m.
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Ace, (JLM , Is This J Loves me?), give me a break. Talk about naif (adj or n). The fakir is the guy who pretends to indentify w/ the normal person who is not the son of a Brigadier General nor the grandson of a Brigadier General. He bought his way into the Ivy League and graduated on the absolute bottom of his class. There is nothing to recommend McCain. Your argument is you would rather fly w/ a guy w/ two years experience. My argument, you dolt, is I'ld rather fly w/ a guy w/ a flight plan. This might infer he has some experience. LOL, as you are so fond of texting.

windle
October 14, 2008 at 9 p.m.
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Ace, Dear Naif, I still wonder if you GOOGLEd 'Steve Stoll Palin'. You might add to the list to google, 'Mark Chryson Palin.' How about- 'Alaska Palin First Dude', or even 'Alaska Palin First Gentleman'. How about 'Inuit Palin hunting rights sold to big sportsmen outfits'. I could go on, ad infinitum. Unless I am convinced you have really looked into this and still maintain your support, without unbiased comment, you are just another poseur,without substance. The best offence..etc. that's all you have got. There is a very real posibility should, as unlikely as it now seems, McCain becomes Pres., at age 73, and he suffers a stroke, heartattack, another bout of melanoma, whatever… and Palin becomes Pres., this is so scary, I think I will give up on the concept of human intelligence , and join you in the cesspool. Tell me, what do you know about her that has not been carefully spoonfed to all of us. Talk about naive. You are intelligent, no dootabootit, but how can you really buy this old garbage. This same old garbage is how we got here, and, believe me, Ace , it ain't over yet.

JLM
October 14, 2008 at 9:15 p.m.
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I am no apologist for W. I think he did a lousy job in managing the economy. He ran as a conservative and he governed like a wild eyed liberal. Frankly, it is one of the great mysteries of the world as to how GWB did not wield his veto pen until it was too late. Luckily, W is not running this time around. The funny thing is that he might deal O the same fate as the Goron and Kerry.

I assume that by BGs you really mean Admirals. This would work out just a bit better as, in fact, they were both full Admirals. No mean feat particulary given that McCain's father was also right at the bottom of his class (423/431 '31 Navy). Of course, father like son had a sterling combat record.

And, I don't think that Annapolis is a member in good standing of the Ivy League. I'll check on that and get back to you. LOL

A kid is born to the family business of being a sailor. A good honorable family which has applied itself through the centuries to making the world and our Nation safe. The kid follows the family tradition and goes to Annapolis and learns a bit about character and acquits himself well in some very trying circumstances. Very well indeed.

He applies himself and carves out a worthy record of service to his country – never really having had any other job – since 1958.

Another kid is born in Hawaii, abandoned by his father, benefits from affirmative action and goes to the best schools in America. [Pretty sure Columbia and Harvard are, in fact, Ivy League schools. LOL]

He experiments with drugs and puffs up his resume in addition to some weed.

He moves to Chicago and becomes a “community organizer” in a cesspool of political corruption on the south side of Chicago and befriends the likes of Ayers, Rezko, Wright, Pfleger, al Monsour, Giannoulias, Emil Jones, ACORN – he becomes like them: corrupt, devious, opportunistic and predatory.

Now you get to place your bets on which one will have the character to lead our Nation.

I would rather fly with guy who has a lifetime of service and evidence of character rather than a naif, fakir and poseur who probably had ACORN make his flight plan. Because on a real flight plan there is no box which you can simply fill in with “present”.

knee_dropper
October 15, 2008 at 7:40 a.m.
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Would you really want to fly with a guy that wrecked five aircraft? A guy that dumped his disfigured wife and first three kids when he got back from Vietnam for a millionaire rodeo beauty queen. You know who were involved with Nazi collaborators (Singlaub) and benefited the likes of Keating, to the tune of several billion of tax payers money? That one, LOL. His sidekick Palin is even worse, have you googled any of the material that windle been bringing up? If you want to muck-rake, your man McCain no shining star buddy. The country's not that naive this go around to fall for the old fear-mongering trick.

Steve Lewis
October 15, 2008 at 9:09 a.m.
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If your only tool is a hammer, every problem begins to look like a nail. McCain is not versatile enough with other tools.

Military might used to supersede economic and alliance building. No more. Today's military misuse in Iraq undermines use of the other two. Economic and alliance skills are the future, not the military.

Obama will be the better choice. Amazingly and fortunate for us, he already has global political capital to spend.

As to the problem of “redistribution of wealth”, tax policy to date has had the same effect, only it was pulling money away from the poorest and giving it to the richest. The class gap has grown, that's undeniable. Shrinking that gap would be the preferable direction, in my opinion.

JLM
October 15, 2008 at 10:43 a.m.
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Again, I am no great proponent of McCain. I acknowledge great misgivings about everything you note with the exception of the business of the airplanes (about which you know next to nothing) and MG John Singlaub USA (Ret) who I know personally to be a great patriot. So, we both agree that John S McCain is a flawed human being.

At least McCain's honest (that is a bedrock character trait without which almost nothing else matters) and has a 50 year record of service to the country.

Again, the election decison is binary – one “yes” and one “no”. Obama has long ago earned my “no” leaving McCain the holder of the “yes.” By default. If you feel better, envisioning that “yes” being awarded with fingers tightly gripping my nose, so be it. Nonetheless, McCain is the better bet for our future – if one wants a bright future.

Freedom – whether physical freedom or entrepreneurial freedom or trade freedom – is the fundamental principle which is ensured by military might. Conversely, no strong military force can be maintained unless it can be funded by a free people and a prosperous economy. The relationship is truly symbiotic. We are the macro example and Switzerland is the micro example.

We have no real alliances in the world – as do not the Swiss. Look at the ironic conflict between our inclusion in NATO (Article 5 – “an attack on one is an attack on all”) and our exclusion from the European Union – whose very existence is guaranteed by NATO's military might while NATO's military capability is underwritten primarily by American arms.

When Europe needs us, we are their military ally. When their safety is insured (by America's inclusion in NATO) and the premium checks have cleared, they leverage that safety into their own financial marketplaces and compete aggressively against their protector including creating their own currency – the Euro. We are not their economic ally.

In the Middle East, we are simultaneously the proponent for freedom for the assembled Arab nations, their protector from the “aggression” of Israel, the developer of their wealth (the oil bidness) and their largest customer for their only export.

How do they respond? They conspire against us in the marketplace. They rig the market for oil. They fund terrorists who attack America.

The realpolitik of the world is that countries have fleeting overlapping interests and when they coincide, they form fleeting alliances and when they don't, they don't.

Going off and talking with avowed enemies is not going to change their conduct. Do you envision Mahmoud Ahmadinejad saying: “Wow, Barack, dude, I just never thought of it that way. Thanks for the enlightenment. Let me spin down those annoying centrifuges right now.” Not bloody likely.

Tyrants do seem to understand a foot on their throat, a bayonet in their ear and a bit of – “Sic Semper Tyrannis”.

JLM
October 15, 2008 at 10:51 a.m.
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(cont)

The redistribution of wealth is simply the reinvigoration of the welfare state (something even Clinton saw as a problem) – recognizing that for a lowly compensated worker/slacker the motivation to work a bit harder and to generate some additional income is destroyed by the decreasing amount of “redistribution” he will receive. In effect, he is working himself out of his free loot.

The real answer is “upward mobility” rather than redistribution. Reward hard work, savings, entrepreneurial risk taking and success, innovation – rather than penalizing the most productive part of our society.

Let's be honest – not everyone has what it takes to succeed if the “it” is hard work. Sometimes, it's just luck. Though I have noticed that the earlier I come to work, the luckier I get.

There will be real world consequences of increasing taxes on small business – they will only become more efficient and eliminate more jobs. Take a look at the current City of SBS dilemma – too many staff members in a time of declining revenue. What is going to happen? Layoffs.

You reduce the profitability of small business by increasing taxes – the same thing is going to happen. You like 6.1% unemployment? You'll love 10% unemployment.

No honest guy would be against eliminating tax loopholes, corporate welfare (which is what the “bailout” truly is), outsourcing of jobs and other obvious abuses.

The recent Michigan experience (Dem Gov Grantholm) is a free peek into the future. $300MM deficit + $600MM tax increase = $300MM deficit. She raised taxes, drove out business and ended up with the same deficit. Cutting taxes increases revenue. Increasing taxes reduces revenue. This is the real world not Obamaworld.

Get a grip on reality cause reality's got a grip on us all!

Penalizing success is only going to ultimately penalize all American workers.

Jason Krueger
October 15, 2008 at 5:19 p.m.
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The nicest thing to come out of the past few weeks is for the country to finally realize exactly how wrong people like JLM are. Slowly this country is waking up to the fact the RNC just makes up weird stuff and passes it off as the truth. To once again clarify, point by point.

1- McCain IS a bad pilot. His five crashes were all for “reckless” behavior. This is what the military investigations called it- not some democrat.
2- McCain=honest. How do you explain his attack ads? He approved every one of the messages including the ones even Karl Rove called “stretching”.
3-The election is not binary. It is not base 2.
4-If you consider freedom a principle given to you by military might, this would explain the fundamental flaw in your intelligence. Freedom is a god (or evolution or whatever you want) reality of existence. Lack of freedom can only be achieved by some form of force- militarily, economically, politically, choose whatever you like.
5-Your view of the middle east, oil, rant is so flawed it needs to just be re-written.
6-Obama's tax plan which is what I am assuming you're referring to in the “increase taxes” portion will NOT increase taxes on small businesses. 90% of small businesses will NOT be affected by his proposals.
7-Your hatred to talk to your enemies goes against all logic- even the arguments our own military are using. Obama and McCain are saying the same thing here. Talks between countries need to occur. Sadly, McCain (going back to the truth comment) continually tries to enflame his nut-case base by implying Obama would just give Iran a phone call one Sunday morning. Even the Bush administration is conceding talking to N. Korea and the Taliban might be a good idea!
8- Your vague reference to SBS is good. Lets continue on that though… The City gives to developers and massive corporations plenty of concessions and subsidies. Look how it's benefited them in these lean times…. Let the “fat cats” do whatever they want and then ask the working man to come bail them out when their method of operation proves a failure. Hhhm- worked great here and worked great on a national level!!!
9-No one is penalizing success. Shuffling money around in get rick quick schemes (the fundamental cause of our economic crisis) is a direct result of de-regulation and poor oversight. (“Let the markets govern themselves!” says the Right) It is not a legitimate or honorable way of doing business. It is a leech on the truly productive workers of this nation.

Yes JLM- we do have a grip on reality. We are all living in the world the leadership of the past 8 years has created and we wish that reality to change.

Steve Lewis
October 15, 2008 at 5:34 p.m.
› Suggest removal

JLM,
Yes, national income tax rising in the U.S. could send businesses elsewhere. It looks like other nations will be raising their taxes in this mess, so the effect will be less.

I would assume you advocate the U.S. cutting its budget (by at least 6%) to better match its revenue. Hmmm, spend billions less. That amounts to an even greater loss of business doesn't it?

Your Michigan example oversimplifies, and happens to focus on our hardest hit state. As in Detroit, Michigan.

It is illogical to me that a person will work less because of the tax structure. Goals are goals, you do what it takes to meet your goals. Taxes won't change your goals.

Taxes do affect choices of investment. There could be less investment. But tax structure can also shape incentives and direct investment to the needed places and new businesses, like renewable energy.

The status quo of the current tax cuts means deficit spending, which long-term is impossible, so JLM instead of the NO TAX mantra, where is the smart future? How do YOU balance the budget?

windle
October 15, 2008 at 6:33 p.m.
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JLM, Ace, I am still familiar w/ your talking points. I am waiting with baited breath to hear, figuratively speaking, of course, to know what your response is to my challenge to GOOGLE palin steve stoll, and palin mark chryson. You can forget about GOOGLEing palin inuit hunting rights vs big sportsmen groups, for now, as well as.. palin big oil contracts. And don't worry about palin first dude, or palin first gentleman.

windle
October 15, 2008 at 7:04 p.m.
› Suggest removal

Ace, I must posit I do not disrespect you. I just wonder how questions about Bill Ayers are legit, and why Steve Stoll and Mark Chryson are off limits? Please, there is a disconnect here.

JLM
October 15, 2008 at 10:23 p.m.
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McCain was involved in 5 flying “incidents” of which only two were finally categorized as “accidents” and in only 4 of them were aircraft actually destroyed. I was very interested in McCain's flying record as I am a pilot.

1. In late 1967, McCain was shot down by enemy fire (SAM missile) in an A-4 Navy attack aircraft while on a bombing run at 3000' over Hanoi. It was his 23rd bombing mission over Hanoi. A pilot on a bombing run at 3000' is committed to the target and does not deviate until he has released his bombs. This takes balls when being lit up by SAMs. McCain had balls. McCain was shot down, crashed into a lake and was captured. He was doing his job. We lost a total of over 3,000 aircraft in Viet Nam.

2. In July 1967, McCain was getting ready for a bombing mission when another aircraft on the USS Forrestal accidently discharged an air to air missile. It detonated, caused a fire and McCain's plane was destroyed. A total of 134 men and 16 aircraft were lost. McCain had no responsibility in this accident.

3. In 1966, McCain was flying a T-2 trainer from Philadelphia back to Florida after having attended the Army v Navy football game on Thanksgiving. The T-2's engine had just recently been rebuilt. He suffered an engine failure. He rode the plane down to 1000' to ensure it did not crash into a populated area and then safely ejected unhurt. The initial preliminary engine inspection was inconclusive and the final engine tear down found problems with the engine and McCain was absolved of any fault in the engine failure.

4. Over Spain during a Mediterranean deployment McCain flew a Skyraider through some wires while engaged in a low level training flight. He and the aircraft both returned safely to the carrier. He was accused of “hot dogging” but was absolved when the flight plan was shown to have clearly called for low level flight in the same area in which the wires were deployed. The plane was not lost.

5. While a student at Corpus Christi NAS undergoing flight training in a Skyraider, McCain crashed into the bay while on final approach to land. He indicated that the engine quit. This was neither proven nor disproven because of the subsequent flooding of the engine itself. It is likely that it was attributable to pilot error given the combination of low power setting, approach to land, loss of lift due to turning attitude and the pattern of the crash; however, observers failed to substantiate a “stall” pattern of flight which would have been the result of such control and power settings. Had the aircraft lost power, angle of attack and speed sufficient to actually stall, McCain would have likely been killed. The crash angle and the controlled descent into water (ditching) were consistent with a pilot having made a careful decision to land in the water. The final report was inconclusive.

Those are the facts.

jlm – ace (i like Ace, thank you very much.)

JLM
October 15, 2008 at 10:40 p.m.
› Suggest removal

I apologize in advance for the tediousness of explaining real world business, GAAP (Generally Accepted Accounting Principles) and tax policy in a political matter but let me try to help you see why taxing small business at any rate is a bad, bad idea.

In general, gross revenue minus operating expenses equals net operating income. GR - Op Exp = NOI. NOI is often called “gross profit.”

Net operating income minus Federal/State income taxes equals cash flow. noi - tx = cf. cf is often called “net profit or after tax profit.”

In general, NOI is not the same thing as cash flow. Cash flow is what you actually have to spend at the end of the day.

A typical service business (restaurant, contractor, retail store) generates somewhere around $75,000 to $150,000 in gross revenue per employee; and, makes a gross profit (before paying taxes) of approximately 7-10%. Many service businesses lose money.

In line with these parameters, if a business had gross revenue of $2.5MM (not a bad size enterprise), it would likely employ about 12-20 employees and the gross profit would be approximately $250,000 – not a bad profit for an owner, no?

Well, what is not seen is the magnitude of “invested capital or assets” which is required to run the business and generate the revenue. These expenditures are not tax deductible and must be amortized or depreciated over the useful life of the assets. Also missing is the requirement for “working capital” the float between the billing for services and the payment. Working capital is the money which is required to keep the cash flowing while the business is operating.

In addition, much of the capital invested and the assets employed must be replaced as the business consumes them. A french fryer does not last forever, does it?

JLM
October 15, 2008 at 11:05 p.m.
› Suggest removal

(continued)

A rule of thumb for a business worth 1 x gross revenue (a valuation algorithm for many small businesses) would be approximately 20-50% tangible assets (trucks, tools, french fryers, inventory, etc.) and 50-80% good will (the difference between the value of the business and the value of the tangible assets).

Most tangible assets will be amortized or depreciated over 3-7 years depending upon the nature of the assets.

In addition, working capital would normally approximate 2 weeks to 2 months of gross revenue.

In the example cited above, if we use the most aggressive parameters: 20% assets employed in the business, 7 years as the depreciation schedule and 2 weeks of revenue as the working capital amount, the owner of the small business actually has cash flow of what?

Gross revenue = $2.5MM
NOI = $250,000
CF = $250,000 <<< assumes corp tax rate of 0%, yes 0%
capital expenditures = $70,000 (rounded down)
working capital = $100,000
funds available to owner = $80,000

One could argue that the owner is being compensated as an employee (owner - employee) and that is included in the derivation of NOI, maybe? Or that the working capital comes from the owner's initial investment, sure I could buy that?

But what is very clear is the sensitivity of increasing the tax rate by 10% – it will reduce the owner's compensation dramatically.

What can the owner do in the face of a tax increase? Can he buy cheaper materials? Less expensive equipment? Renegotiate his rent?

No, he can only manage the staff more efficiently.

What does this mean to you? Somebody is getting fired.

If Barack Obama raises taxes on small business owners, then you can expect them to streamline their operations by reducing the only variable they can truly control – staffing.

Get a grip on reality cause reality's got a grip on you.

[My apologies to any CPAs out there as I have taken a few liberties but I have been buying and selling businesses for a long, long time.]

Joe the Plumber is going to fire some plumbers when Obama comes to redistribute his wealth. This is reality, folks.

Go show this analysis to a homebuilder, a gas station owner or a restaurateur and see if they agree?

JLM
October 15, 2008 at 11:15 p.m.
› Suggest removal

Steve –

The Detroit example is right on the money. Democrat tax and spend leadership. This is the real world. I wish it were not so but it is. Raise taxes, kill initiative. I notice you do not refute the numbers as they are most definitely correct. Gov Grantholm is a sweet, cute Governor but she is way wrong. There is a real chance that the last person out of Detroit and Michigan may turn out the lights.

They have a chance to kill the domestic American auto industry as surely as they did the domestic rice crop. Democratic leadership and greedy unions. Works every time.

For the record, our most dire state is Louisiana. You may remember Katrina and the destruction of Nawlins. They, luckily, have a Republican Governor who has managed their financial affairs in a more prudent manner.

While everybody is whizzing on everybody else's legs under the guise of Presidential politics, these are real world verifiable examples of ill advised tax policy which are eerily like Obama's proposals.

If the City of SBS fails to rise to the ocassion, you will see it up close and personal. The failures of Detroit started with similar little, seemingly insignificant budget deficits which were ignored and allowed to fester for years.

Ace

JLM
October 15, 2008 at 11:30 p.m.
› Suggest removal

Jason –

You have really stumped me now. I just have to know, what the heck does this mean?

“Freedom is a god (or evolution or whatever you want) reality of existence.”

LOL

Our Nation was formed as a result of an armed “revolution.” Our birthing forceps were bloody bayonets. Freedom is a mortgage which must be paid in blood. Thank goodness we continue to produce men who can fight and win. Who do you think is going to preserve our freedom – ACORN?

If you can find where GWB has called for direct unconditional talks with the Taliban – the freakin' Taliban –, I will buy you a 12 oz tenderloin steak at Old West. You've got til Monday, dude.

If you were a gentleman, you would return the favor. I like my steak just a bit rare of medium.

You are way, way goofy. LOL

Ace

teleflypicker
October 16, 2008 at 6:49 a.m.
› Suggest removal

The Dems have not had congress since 2006. It was 2007 when they were seated, but they still have not accomplished much in those 21 months.

Of course, what was it they were supposed to accomplish? Unwind the mistakes of the previous majority. It is a little disingenuous to complain that they have not been very successful in fixing those mistakes without “owning” those mistakes and acknowledging their source.

When it comes to taxes, I am looking forward to a break. I make quite a bit less than 250K. I employ about 20 people and they all make less than 250K. As a point of fact, Obama's tax plan does not call for a 28% gains rate as mentioned above. He did mention that figure several months ago, but has since backed away from it. His plan does call for an increase to 20% on couples with incomes above 250K which I am not thrilled with since I aspire to make that much, but… if I sell a stock with a long term gain and my income is under 250K my tax is still 15%. McCain proposes going down to 7.5%. I am sure that many people would appreciate that, but at this point I don't see that as a responsible proposal.

I generally spilt my ticket based on the individual and I am not a registered member of either party. I was voting for McCain based on experience until he named Palin as a running mate. His move to negative campaigning in recent weeks has reinforced that switch for me. I believe that there are more like me in the middle than there are in the social conservative right that he has been pandering to. Obama did not win my vote, McCain lost it. I think that the results of this election are going to be even less close than they appear right now.

JLM
October 16, 2008 at 7:36 a.m.
› Suggest removal

In a capital crisis, the solution is not to raise taxes. This is the medical equivalent of prescribing a good bleeding with leeches.

Our trading competitors by and large do not tax capital gains at all. If we are truly in a global economy, we must be competitive on every front.

While the magnitude of a capital gains tax increase may be debatable cause even Obama has seen the folly of his earlier pronouncements (and it is useful to remember that the Congress will make this final call), what is not debatable is the judgment which would even consider raising taxes on capital gains at a time like this.

Barack Obama is the most liberal member of the Senate, a sobriquet he earned with great effort. His tax raising reality will surely outstrip his campaign promises.

The capital gains tax issue is probably moot as America has a huge capital loss which will also impact ordinary income tax receipts as taxpayers currently can deduct $3000 of capital losses against ordinary income.

Tax increases will have to make up the capital gains income lost in 2008 as well as the ordinary income deductions pertinent to capital losses.

We are looking at huge tax increases for everyone and if Obama is elected we have the Senate's most liberal member and best tax raiser coupled with Speaker Pelosi from the People's Republic of San Fran.

Get a grip on reality cause reality's gonna get a stranglehold on you!

Jason Krueger
October 16, 2008 at 8:21 a.m.
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JLM-

Here's your evidence of talks with the Taliban:

http://www.washingtonpost.com/wp-dyn/con…

If you don't want to bother reading it all, just read paragraph 3 and the one I pulled from the tail-end of the article.

“….Reconciliation of moderate Taliban insurgents who are willing to ally with the Afghan government is emerging as one main thrust of Petraeus's approach, according to officials and experts who have discussed it with him recently.

“In Afghanistan, or in any country where society is dominated by tribes, reconciliation really needs to be a focus,” said a senior Central Command official.”

..medium rare is fine but I'd rather have an 8oz tenderloin if that's ok.

JLM
October 16, 2008 at 10:20 a.m.
› Suggest removal

Come now, Jason, let's review the bidding here. I fear you have earned an F, my good man.

I said:

“If you can find where GWB has called for direct unconditional talks with the Taliban – the freakin' Taliban –, I will buy you a 12 oz tenderloin steak at Old West.”

And the brief you submitted appears to say:

“Reconciliation of moderate Taliban insurgents who are willing to ally with the Afghan government is emerging as one main thrust of Petraeus's approach…”

What appears to be missing in your submittal is any actual mention of “GWB” or “direct unconditional talks”. Were those not the predicates of our little bet?

Perhaps I am reading it wrong? Or maybe I missed it?

Or perhaps you are just a liar like Obama?

Your quote is so lame, I don't even feel it necessary to point out that even read at its most advantageous (the summary judgment standard I would gladly and graciously extend to one such as you) it is simply not on point.

It is a bit “piling on” to point out that the Wash Post article is actually about the 100-day assessment exercise undertaken by Gen Petraeus as part of his initiative as new commander of the US Central Command and that the “government” he was referring to was the Afghan government not the US government.

The article is about a strategy reassessment and mentions “reconciliation” of moderate Taliban elements. It says absolutely nothing about direct, unconditional talks between the US government (that's the place where GWB works after all) and the freakin' Taliban.

The article goes on to say – “General Petraeus is not in charge of our diplomacy.” Diplomacy is that dainty little business where governments talk to other folks and wherein one might look for evidence to support an assertion of “unconditional talks.”

You, sir, are a big fat prevaricator! An equivocator, a quibbler! LOL – no offense meant. You are an entertaining little sprite, though woefully misinformed.

You travel in good company with that naif, fakir and poseur whose water you carry.

Now, I will be wanting that steak tom'w night!

I am Joe the Plumber and I approve this message!

ACE

JLM
October 16, 2008 at 12:29 p.m.
› Suggest removal

Perhaps a naughty little cabernet with just a hint of mischief and a lovely little saucy finish would go nicely with my steak?

Jason, please see what you can do and please, please, please make sure its's just a smidgen more than medium.

Oh, yes, and might you arrange a nice salad wedge with blue cheese crumbles and just a few bacon crisps (everything is better with bacon)?

Oh, I almost forgot, I would like a bit of bernaise sauce and maybe a nice NY style cheesecake for dessert?

Thanks, Jason.

ACE

Steve Lewis
October 16, 2008 at 2:18 p.m.
› Suggest removal

JLM,
Usually you write well. But today you offer this thread a dead end of taunts. The higher path lies in inviting conversation, don't you agree? If your position were truly sound I would expect a more moderate tone. You obviously have the patience to write a lot.

I'm no economist, but the web's a great source isn't it:

http://www.cedarcomm.com/~stevelm1/usdeb…

Does a pretty good job of debunking tax cut beneifits. See Figure 1, and Figure 3.

JLM
October 16, 2008 at 4:05 p.m.
› Suggest removal

Steve –

Please accept my apology for goofing on Jason. I am sorry. It is mean to pick on defenseless folks and I will try to behave myself in the future.

I am really not patient at all, I can just type incredibly fast. This is my distraction from serious packets of work which require my undivided attention.

On a more serious note, the economic info which you cite has been around for some considerable time. Serious economists have done similar analysis. I find this work to be a bit suspect given its obvious idealogical animus toward “Neo-cons”. Serious economists do not care about the political leanings of those in power when analyzing the economy.

The flaw with the analysis, including its poltical focus, is the failure to note which party controlled Congress; and, to recognize the lead-lag nature of changes in revenue collection after tax policy changes.

The party controlling Congress has more to say about spending than the President. The President literally cannot spend a penny that Congress does not appropriate.

Tax cut revenue impacts are not immediate. Some economists argue they lag as much as 5-10 years which makes sense given the investment cycle. Add incentives to explore for oil and it may take 3-4 years to explore, drill and operate — makes sense, no?

In that manner, there is some very compelling evidence that the Reagan tax cuts were hitting the books by middle to end of the GHWB Presidency and the Clinton years. Clinton had the unusual benefit of having the revenue piling up while the Republican Congress held some very tight purse strings.

My favorite Presidents from an economic management perspective were DD Eisenhower and JFK. They were an unusual pair. A 5-star General of the Army who handed over the reins to a Lt (jg). DDE got us out of Korea and presided over the creation of the US nuclear arsenal while balancing 8 straight budgets. How? He reined in the Pentagon by preaching “minimal deterrent force” levels of funding rather than “overwhelming force” levels of national defense. Isn't it interesting that a guy whose profession was the military was the toughest taskmaster on military spending. “Beware the military-industrial complex!”

JFK was a huge tax cutter.

As a guy who has spent an awful lot of time around generals, I can tell you that letting generals design their own toys is mighty, mighty expensive.

Steve Lewis
October 16, 2008 at 6:19 p.m.
› Suggest removal

JLM, Those were awesome Americans. And well put. Thanks.

I didn't take the time to decipher it but that webpage had a chart showing both the president and who controlled congress. It may illuminate the effect of congress some. I agree that there is a lag, which I would put at 1 year, but whatever…

My main point will be that we cannot cut taxes. A wartime tax cut is something our kids kids will feel. All that military spending amped the economy - that $10 billion a week was going to soldiers and defense contractors. That was the time to tax as well. Instead we went shopping again. For houses apparently.

I'll be surprised if either candidate lived up to his tax cut promises. I hope they don't. Its time to get real with the balance sheet we plan to hand to the next generation. Would you hand your kid a business saddled with the debts of your life? I don't think you would.

It would be good to take this conversation past neo-cons, reaganism, gwb, and ideaologies. The old playbook is so not up to the task.

The game has changed.

Somebody just dropped the Broncos in Islamabad and told Shanahan the world is counting on him. Instead of guns they get 100 college grads and a few books by Milton Friedman. Oh and the Koran. What advice would you give Mike?

Just kidding. Trying to wake you up. Better questions:

What advice would we give to the next president?

If the next president asks, are we willing to take a different path?

JLM
October 16, 2008 at 6:43 p.m.
› Suggest removal

Nobody is going to cut taxes because there is not enough juice left to reduce revenue further. The spent it all on the bailout. That's why they are called “campaign” promises. Not going to happen.

The next big explosion is going to be credit card debt followed by the collapse of the auto industry at year end when new models begin to flood car dealerships (if they can stay open).

The real challenge is to curtail spending. It has to be done cold turkey. Never in the history of the US have we ever been able to actually reduce spending – only slow the rate of growth.

The next President has to ask for the line item veto and take the fight to the people. It has to be done on the first day of the new Presidency and the President has to insist. He should not sign a single piece of legislation until he has the line item veto. The next President should cancel the Inauguration parties and parade until he has the line item veto. The Congress will give it to him.

If Obama is elected, they will give it to him because they will still be in love. If McCain is elected, they will give it to him to spite him and to be able to blame everything on him plus they will be scared to oppose him with Congressional elections only 2 years in the future.

Everybody says that government should run like a business (kind of a silly thought actually, but play along) – but what power does a business executive have that not even the President of the US has? The freakin' line item veto. A business executive can cancel any expenditure he doesn't find prudent even after it has been authorized.

As much as I dislike Obama, I would personally lead the riots to get him the line item veto because it is the right thing for the country even if a naif, fakir and poseur like him wields it. While I hope he doesn't win, if he does – he's still our and my President and I would do anything to assist him and the country to succeed.

JLM
October 16, 2008 at 7:03 p.m.
› Suggest removal

(cont)

We have to conclude 3 wars with dispatch – Iraq, Afghanistan and the first phase of the war on terror (kill OBL). Concluding these wars is the quickest to stabilize the world and to stop the financial drain. Victory is always the cheapest solution in the long run.

Iraq is almost there. Afghanistan is going to require more troops and NATO is going to have to step up their commitment. Lots of folks don't know that NATO has a substantial amount of combat troops in NATO. The Germans and the Dutch have some very fine combat troops there.

We have to go engage with the Russians and negotiate a one year stand still until we are done with Afghanistan. Why would they consider that? Because OBL was the instrument of their destruction in their Afghan adventure. They hate him and would like to see him dead. If we were really devious we would ask the Russians to lend us some Spetnaz units and take the fight to the mountains this winter.

The 101st has begun to press into the mountains along the eastern border and they are getting a new brigade from the 10th Mn Div in about 3 weeks. They might deploy a couple of Ranger Battalions. Winter fighting in the Afghan mountains is unimaginable – cold, snow, 14,000' but it can be done.

The enemy's mobility and visibility drops to zero because they are ground bound in the snow and huts while ours continues to be a bit better with air, UAVs and limited tracked vehicles.

We just have to tighten the noose. It's time to go all in on their asses.

The new Pakistan gov't will cut us some slack for the winter because their tribal warlords cannot get out of the mountains in the winter to start trouble in the valleys. It will be a fleeting opportunity.

You heard it here first, there will be a major offensive in about a month and it is likely to net OBL. This is a risky but reasonable strategy.

In addition, the Pakistanis are going to let us into southern Pakistan to route out the Taliban who are using that as a refuge for recruitment, training, refitting and launching attacks into Afghanistan.

Why? Because if we don't take them out, the Taliban will eventualy launch a revolution. They are responsible for killing Madame Bhutto and her husband is the new PM.

It is all coming together but it will take troops – flat bellied, young bloodthirsty Regulars. We've got the right guy leading the show in Petreaus. He is the best educated General in the Army and has the pragmatic sense of what will work while not being afraid to find, fix and kill the enemy.

He has the confidence of the senior Army leadership because of their recent success in Iraq. He is the first of the post-VN generals. He was too young to serve and does not have the defeatist attitude of company grade VN officers.

The conclusion of these wars is one of the keys to balancing the budget.

teleflypicker
October 16, 2008 at 8:13 p.m.
› Suggest removal

Dang, how much time do you two guys have?

playa46
October 16, 2008 at 9:15 p.m.
› Suggest removal

Seriously guys, get a life. Lol, Jk

JLM-

Here we go again, we have to have another discussion on the war. Let me say again that the war right now is sucking our money that we could use to actually benifiet America. Iraq is not almost there, as you say JLM. Guerilla warfare (hit and run) keeps us from fighting the enemy from where we can hit them, in front of us. The enemy simply, vanishes…

Your idea makes sense, but this gives OBL followers more of a reason to hate us. Why haven't we defeated the terrorists? Because we simpy can't catch them. Osama could be dead for all we know.

JLM
October 17, 2008 at 10:06 a.m.
› Suggest removal

Today the Marines pulled out of Fallujah. They ran a 10K race there 2 months ago.

Last week the #2 guy in Al Quaeda in Iraq was waxed for the 10th time in the war.

A total of 12/18 provinces have been turned over to the Iraqis including Al Anbar. Four more will be turned over by the end of this year. Only one province is considered as lawless and it has the focus of almost the entire American military in Iraq. It will come into line shortly.

Iraq held its version of the World Cup in Baghdad and a team from the Kurds won. Attendance was over 250,000 over a 2-week period.

There is more electricity, water, waste water flowing today in Iraq than since its founding. More schools operate daily now than ever before. Not one drop of oil has been interdicted by terrorists in the last year.

More people have been murdered in Chicago thus far in 2008 than soldiers killed in Iraq in 2008. The entire country of Iraq is arguably less lawless than Chicago.

There is an impending election (which is now no longer even remarkable) and there is less voter fraud than in the US – hmmmm, no ACORN there?

The war in Iraq IS just about over.

Why? The surge, which was opposed by Obama and supported by McCain, WORKED!

knee_dropper
October 17, 2008 at 11:52 a.m.
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The surge is working, but how long do American troops have to stay to keep a lid on sectarian strife? Your comparison of Chicago murders to American dead in Iraq is laughable since Americans live in highly secured bases and are very separated from the general populace. Tell me JLM, are there almost daily bombings in Chicago, does that city live under curfew, is Chicago's electrical system controlled by militias and are different neighborhoods separated by blast walls? Where would you rather live for a year, Chicago or Sadr city?

JLM
October 17, 2008 at 12:54 p.m.
› Suggest removal

Would you like facts or do you just want to rant?

We currently have troops stationed in Germany, Japan, Korea, Bosnia. Ever hear of the Bader Meinhof or Red Brigades? We have had troops in places like Golan Heights, Somalia. We have troops stationed where we have strategic interests. The world is a dangerous place.

We will have troops in Iraq and Afghanistan for years. We will have a strategic interest in those places for a long, long time.

You must not be up on what is going on in Chicago. The Governor of Illinois has threatened to call in the National Guard to bring some semblance of law to Chicago's south side projects. They are, in fact, under a curfew. Chicago averages more than a murder a day. There is a war going on in Obama's neighborhood and Mayor Daley is having a very tough time dealing with it. It is tragic.

The City of Chicago is way small compared to the country of Iraq.

I would rather stay in Iraq and withdraw from Chicago.

Rant as you might, the war in Iraq is just about over and unilateral withdrawal is not the right answer. The surge worked and it will work in Afghanistan.

Why is it so difficult to understand the concept of sending more troops and killing the bad guys is how wars are won? The big variable is leadership and national resolve.

If you're going to get in it, then WIN IT! Winning will be the least expensive alternative.

Steve Lewis
October 17, 2008 at 2:57 p.m.
› Suggest removal

JLM,
That was a good read above. I don't know how you come by so much information, but I learned a lot. The military insights are worth pundit pay, so I won't complain about your word count.

We may disagree on the vote, but I'll match your plan to support the winner. Divided we fail.

My McCain/Vietnam “we should have stayed and won it” comment far above came from this article in Atlantic magazine:

http://www.theatlantic.com/doc/200810

I'm amazed at how entrenched we become with our candidate support. Lehrer's program had a focus group of 4 R's and 4D's watch the debate. Their comments later couldn't break the talking point molds the campaigns had built for them. Scary how programed we get.

Its hard to keep an open mind.

JLM
October 17, 2008 at 11:36 p.m.
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SL –

I think one of the most dangerous and short sighted things we do is to be party members first and then voters second. We should marshal our values first, see which candidate is most consistent with those values and then accidently notice which party he/she is from.

Issues are sometimes a bit nuanced and we should not be afraid to look at them in that manner. I am wildly in favor of universal healthcare and educational opportunity but I don't like a singlepayer approach or a “free” education approach.

I am wildly supportive of the military but opposed to new weapons systems which are so far superior to what any adversary currently possesses. You can only kill the bad guys once each. In addition, we are not clever enough in weapon design. A perfect exemple is the UAV – cheap, unobtrusive, long time on target, lethal and no pilot risk. Brilliant!

There a number of folks I have met that I feel great kinship with and believe to be strong leaders and am at times surprised to learn they are of a different party. Perhaps we need a couple more parties – a pipe dream for sure.

I am going to support a fellow I know for SC Governor whenever he decides to run and he is as Democratic as possible but he is truly one of the finest people I have ever met.

teleflypicker
October 18, 2008 at 6:25 a.m.
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SC governor? Is that where you live?

bubba
October 18, 2008 at 7:45 a.m.
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I won't get into the military/political discussion, except to say that I think this election season, perhaps more than any other, has truly shown that party politics are ruining this country, and a great many politicians nationally and state-wide have shown they care more about their party and getting votes than the future of this great nation, which angers me off to no end.

But what I really wanted to comment on was the original article, by someone who claims to be an economist. First of all, economics is a branch of science, so the scientific method applies. For someone to attempt to discredit a theory because it is a theory, and not a fact shows a great misunderstanding of the scientific process, which is reminiscent of that other argument (you know the one I'm talking about) which is blatantly anti-science. Furthermore, the author of the article refers to the Laffer Theorem, and it is worth pointing out that theorems can be mathematically proven, whereas theories depend on the scientific method, whereby they are taken as true if they fail to be disproven enough times. These subtleties make the author's credentials as an economist/scientist very suspect in my mind.

But what I found even more troubling was that his evidence cited to disprove the Laffer Theorem was national debt, which is irrelevant (and the author goes as far as to admit that). If I turn on a faucet and leave the drain open, the fact that the sink doesn't fill up does not prove that the faucet does not put water in the sink, but that is basically what the author has stated. The only figure that would tell you if Reagan's tax cuts had their desired effect would be the average tax revenues per person in this country, as national debt contains another huge variable (government spending). A quick bit of online research shows that total US government tax receipts have grown from $.5T in 1980 to over $2.5T in 2008. The populations grew from over 227M to over 300M in the same period, so total tax revenues per person in the US have grown from less than $2,050 to about $8,050.

bubba
October 18, 2008 at 7:46 a.m.
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(continued)

I don't know why individuals would skew the facts intentionally to argue for more taxes.

The author also states that 90% of us are only 4.7% better off than we were 8 years ago, while 1% are 42% better off, so we are all 'sinking.' The fact that the number for the 90% is a positive 4.7% shows that everyone is better off on an inflation adjusted basis. Sure, it would be nice if that number was bigger, but unless it's negative, people are, on the average, doing better, which is a good thing. The only explanations I see for this skewing of facts could be that the author is 1) really bad at math or 2) jealous that people have more money than him. I will let you decide.

Steve, the article that you posted showed two graphs. The first one tries to use national debt as an argument, which I have addressed. Figure 3 shows % increase in revenue and spending. The author of that article claims that if during one president's term, revenue increases 15%, and in the next president's term, it increases 10%, revenues have gone down. I know you said you are not an economist, but I believe you are an engineer, so I will trust your math and science skills enough to understand that this is just plain wrong; it shows that revenues may not be increasing as rapidly, (i.e. the second derivative is negative, first derivative is declining but still positive). But clearly a 10% increase is still an increase, even if the last guy saw a 15% increase.

I also find it interesting that this particular chart starts at Johnson, and shows steadily increasing tax revenues for every president since. I don't have the time or resources to stretch that graph further back in history, but JFK (that Limousine Liberal) was one of the first proponents of the Laffer Theorem, and cut taxes accordingly. The fact that every president since then has seen an increase in tax revenues could be taken as evidence that this experiment has worked, no?

Steve Lewis
October 18, 2008 at 11:03 a.m.
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JLM,
Trying to keep it real.
Bubba,
I prefer to stay with national debt as my end all parameter. My balance sheet is about the kids and their kids. The debt increased the most during the tax cut presidents Reagan and Bush II. So your revenues insight also doesn't tell the whole story.

Sure its complicated with congress grabbing the tiller, military spending inflating GNP and then circling back into tax revenues, etc…

My basic premise is still against cutting taxes during a war. I admit I can accept some increased debt in the near future to set in a new course for the country. But overall, debt is a national security issue too.

Tele was partly right about all this time to debate, I had more time during the week. At the mill today. Catch you later.

Steve Lewis
October 18, 2008 at 1:43 p.m.
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Bubba,
The same problem may exist with your argument for personal income. Its a revenue argument. Scott adjusted for inflation, which may roughly reflect cost of living, but inflation measures different stuff, such as adding the industial stuff. Will cost of living indexes also show all the boats are rising?

There's a measure of socialist vs. capitalist argument going around. Is it ok for the oncome gap to be keep growing? Isn't it harder to call for capitailist principles applied across the board when Wall St. has just been saved by this $ .5 trillion bailout?

Let's keep it real.

JLM
October 18, 2008 at 10:20 p.m.
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In looking at the National Debt, it is necessary to compare it to GDP. It is all relative.

Think how broke a guy making $50K and buying a $150K (3 x salary) house w/ a $50K downpayment is the day he signs the mortgage? He owes 200% of his own GDP. National Debt is currently about 70% of GDP.

Taxes – cutting or increasing – are meaningless unless we have spending targets which are supportive of our national goals. We have never, ever cut spending since WWII – we have only slowed the rate of growth for about 6 years during that entire period.

Count me on the side of a strong dollar, modest inflation, spending increasing at 33% of the rate of revenue increase/growth and low taxes.

Today the most productive parts of our society (the folks who pay 80% of all taxes) are paying a bigger share than 10 years ago and are likely to see future tax increases.

The current tax burden (Fed inc, state inc, payroll of all kinds (ss, futa, suta, Medicare, etc.), capital gains, estate, property, sales, gas, fees for services, licensing fees, etc. is over 70%.

Wonder why folks are off shoring jobs and money?

At some point in time if you keep making hamburgers from the milk cows, you better not want milk.

I fear SBS is going to see this in spades shortly with the big whammy of real estate, reduced patronage, unemployment and decreased sales tax revenue.

There is no current example that I can find of tax increases leading to sustainable prosperity. But I could be wrong! We shall know shortly.

JLM
October 18, 2008 at 10:36 p.m.
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One of the problems with capitalism is that it is supposed to be Darwinian – only the strong survive.

The bailout envisions that everybody gets saved (well except for Bear Stearns and Lehman) which means we have rearmed the goofballs who made the original mistakes that created the problem. Why do we think they are not going to make the same mistakes? Obviously the AIG senior management did not pick up on the changed vibe too well, did they?

The original mistakes were created by imprudent intervention into the natural order of capitalism. Darwin was given a furlough, a long furlough.

Once upon a time, loans were based on the 5 Cs – cash flow/capital, capacity, collateral, character, conditions (see I saved you a semester at SMU's School of Banking). But whenever (pick you own favorite villain, mine is Barney Frank) pressured Fannie & Freddie to make a market in substantard loans, they destroyed the natural order of things which was only compounded by the securitization of inferior credits perpetuating the lies.

This unfortunately coincided with the absurd notion that a company could leverage its balance sheet 30-40 times its capital – again a bastardization of what normal market forces would have suggested or allowed.

You can't allow bankers to set their own rules. This is the intellectural equivalent of telling an Airedale you are going out of town for the weekend but have left three bowls of dog chow – please pace yourself as I will be back on Monday. You haven't even gotten to Rabbit Ears before that dog chow is gone. Same thing with bankers.

The argument for more regulation is frankly an argument for unleashing the normal forces of the marketplace – actually underwriting credit in a normal manner.

The good news is that the corrections are pretty simple. Stop making bad loans. The bad news is that the bankers' solution is to stop making ANY loans.

This is why community banking is so vital to the US.

Steve Lewis
October 19, 2008 at 3:10 p.m.
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JLM,
Too nice out to write much now, but %GDP doesn't address the risks when GDP drops or if the interest rate goes up. Spending 10% of GDP on interest payments is a different proposition for a country infinitely in debt than for person with a 30 yr fixed mortgage.

JLM
October 20, 2008 at 9:52 p.m.
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Take a look at GDP for the last 25 years (“modern” economy) and tell me exactly when GDP dropped?

Debt is not evil. It is a spice which when used correctly – in the place of current tax revenue – makes the soup taste better.

Over the same time period, even the highest interest rates (Carter administration) were flattened by managing the Treasury maturity curve. Look at interest rates today – incredibly low in the midst of an unimaginable crisis.

The US Govt has the best credit in the world (well, actually, maybe Walmart LOL) and should use it liberally. Use it or lose it!

knee_dropper
October 21, 2008 at 7:33 a.m.
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Over $5,000,000,000,000 is a lot of “spice,” perhaps it was applied a little to “liberally” in the past eight years. The soup may taste great to you, but I think the taste of that debt is pretty acrid.

Steve Lewis
October 21, 2008 at 11:08 a.m.
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Bubba, you are right that Scott uses a debt argument to fault Laffer theory. Oranges and apples.

But the fruit are not completely disconnected. The debt incurred by deficit spending inflates GDP and circles back into tax revenues. Our kids kids are underwriting the Neocon approach.

JLM, looking back more than 25 years and yes GDP dropped. Looking at Qtrlys, it also dropped during the past 25 years:

http://www.data360.org/dsg.aspx?Data_Set…

Clinton's tax rates and budgets performed the best in this 25 years, if you are concerned about the balance sheet you hand to the next generation. Obama's taxes are said to be the rates that Clinton applied. Looks good to me on the tax side. I think he will spend more than McCain, but I also think Obama will spend smarter than McCain, with greater long term gain.

JLM
October 21, 2008 at 8:07 p.m.
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Error of composition – looking at quarterlies, USC beats Texas 3/4 quarters, looked at annually, Texas Longhorns are National Champs. California loves quarterlies, while Texas loves annual. Of course, you pay your taxes on annual income, don't you?

Quarterly data is too sensitive to spot trends, impacted by weather, strikes, union activity, seasonality, exports, currency fluctations, etc.

On an annual basis over the last 25 years, the GDP has marched ever upward.

It is not just taxes, it is also spending; or, more importantly, it is spending first and then taxes.

Clinton was picking low hanging fruit germinated by RWR in his 3rd term (GHWB) while the Republican Congress constrained spending – you do recall that Newton G closed down the government over spending.

Not a single Clinton budget was ever, ever, ever approved by the Republican Congress. Frankly, no President's budget is even looked at now. This is a huge waste of time and intelligence. Presidents and Congress ought to collaborate even if they are from different parties. Do you realize that no elected official even remotely knows what is actually in the budget? Have you ever seen one? It is beyond the ability for an individual to study in two years.

If BO gets in, who will constrain spending? nobody! Well, maybe, acorn! lol

The government's balance sheet at 70% National Debt v GDP is quite acceptable to me. Remember, we expense the entire cost of every government expenditure as it is paid for – an aircraft carrier costing $15B is expensed over the construction period when its useful life might be 35 years. The actual current expense is really 1/35 per year. This is why government accounting is so looney.

Giving money to folks who have paid no taxes is not “spending” – it is welfare, socialism – or worse, confiscatory. We are getting ready to create a class of dependents who will not know how to feed themselves soon enough. In the first Obama tax year (heaven forbid), almost 50% of the income earners will file no tax return at all and the top 5% will pay 93% of all taxes. Is that a sustainable formula?

I think not. I have the humility to say I could be wrong but it is so extreme nobody in the world really knows as this is most liberal prescription for wealth redistribution ever attempted in the Western world.

Steve Lewis
October 22, 2008 at 12:53 p.m.
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JLM,
We are all second guessing politicians promise. And likely will both be wrong.

I do question any axiom about which party's elected officials are more fiscally conservative anymore. BOTH are awful in that regard.

JLM
October 22, 2008 at 9:28 p.m.
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SL –

We are assessing politicians' campaign promises with a backdrop of a well documented voting “record”, stated governing philosophy and more than a bit of debate.

There will be no tax cuts for anybody – they've spent it all!

This has developed into the silliest decision making process in over half a century. The media has ceased to report the news and has now devolved into a meth lab of home cooking which invents “news.” Even the SBS Pilot is in the tank.

The pervasive corruption of ACORN raises such a vexation and generates such a primal anger, I would not be surprised to see an armed insurrection in Ohio before this is all over.

The personal attacks on individual critics of certain candidates are mean spirited and vicious and undermine the most fundamental tenets of democracy and fairness.

At this stage of the game, I would settle for someone who is at least fiscally “competent” rather than conservative.

I must say that I am feeling a bit of optimism that this mess will work out OK. But, hey, that's just the way I roll! LOL