"The welfare of humanity is always the alibi of tyrants" - Albert Camus

Wednesday, December 29, 2010

What Is A Right? (Video)

Explained simply and logically, with historical references.  Ever wonder why progressive liberals cannot make such resounding arguments? (Hint: for any argument to be effective, it must be logically constructed and backed by empirical evidence)

Tuesday, December 21, 2010

The Coming State/Municipal Crisis (Video)

This will likely be nearly as bad as the housing crash was.  Sit back and watch in horror:

Over 90% Of The Pigford Claimants Only "Attempted" To Farm

My previous posts regarding the scandal of the decade - namely Pigford II settlement, that is nothing more than reparations to blacks under false pretenses - documented how a few hundred legitimate cases of alleged Department of Agriculture discrimination in doling out loans ballooned out to a almost $2.3 billion boondoggle for about 99,000 blacks who, let alone actually farming, allegedly attempted to farm.  Amazing, considering there were less than 15,000 black farmers during the claim period and only about 200 of them claimed discrimination in the original suit.  The responsible party that allowed this to happen is our President as he sponsored the legislation while still in the senate.

The following video is that of Tom Burrell, head of the Black Farmer Agricultural Association, Inc..

You do not have to turn to banana republics for corruption at this scale.  Thanks to Obama and his corrupt band of Chicago thugs, for whom politics of payola is the only game they know, we have become no different than countries like Venezuela.

The Cesspool That Is The Pigford Scandal

'Pigford 101' with Breitbart on Hugh Hewitt Show from Breitbart on Vimeo.

Saturday, December 11, 2010

There's No Escaping Hauser's Law

Following is an article from the Wall Street Journal that succinctly summarizes what progressive dunces like economist Paul Krugman fail to see despite their ivy league education.  Tax revenues as a share of GDP have averaged just under 19%, whether tax rates are cut or raised.  Better to cut rates and get 19% of a larger pie.  Enjoy.



Even amoebas learn by trial and error, but some economists and politicians do not. The Obama administration's budget projections claim that raising taxes on the top 2% of taxpayers, those individuals earning more than $200,000 and couples earning $250,000 or more, will increase revenues to the U.S. Treasury. The empirical evidence suggests otherwise. None of the personal income tax or capital gains tax increases enacted in the post-World War II period has raised the projected tax revenues.

Over the past six decades, tax revenues as a percentage of GDP have averaged just under 19% regardless of the top marginal personal income tax rate. The top marginal rate has been as high as 92% (1952-53) and as low as 28% (1988-90). This observation was first reported in an op-ed I wrote for this newspaper in March 1993. A wit later dubbed this "Hauser's Law."

Over this period there have been more than 30 major changes in the tax code including personal income tax rates, corporate tax rates, capital gains taxes, dividend taxes, investment tax credits, depreciation schedules, Social Security taxes, and the number of tax brackets among others. Yet during this period, federal government tax collections as a share of GDP have moved within a narrow band of just under 19% of GDP.

Why? Higher taxes discourage the "animal spirits" of entrepreneurship. When tax rates are raised, taxpayers are encouraged to shift, hide and underreport income. Taxpayers divert their effort from pro-growth productive investments to seeking tax shelters, tax havens and tax exempt investments. This behavior tends to dampen economic growth and job creation. Lower taxes increase the incentives to work, produce, save and invest, thereby encouraging capital formation and jobs. Taxpayers have less incentive to shelter and shift income.

On average, GDP has grown at a faster pace in the several quarters after taxes are lowered than the several quarters before the tax reductions. In the six quarters prior to the May 2003 Bush tax cuts, GDP grew at an average annual quarterly rate of 1.8%. In the six quarters following the tax cuts, GDP grew at an average annual quarterly rate of 3.8%. Yet taxes as a share of GDP have remained within a relatively narrow range as a percent of GDP in the entire post-World War II period.

This is explained once the relationship between taxes and GDP growth is understood. Under a tax increase, the denominator, GDP, will rise less than forecast, while the numerator, tax revenues, will advance less than anticipated. Therefore the quotient, the percentage of GDP collected in taxes, will remain the same. Nineteen percent of a larger GDP is preferable to 19% of a smaller GDP.

The target of the Obama tax hike is the top 2% of taxpayers, but the burden of the tax is likely to fall on the remaining 98%. The top 2% of income earners do not live in a vacuum. Our economy and society are interwoven. Employees and employers, providers and users, consumers and savers and investors are all interdependent. The wealthy have the highest propensity to save and invest. The wealthy also run the lion's share of small businesses. Most small business owners pay taxes at the personal income tax rate. Small businesses have created two-thirds of all new jobs during the past four decades and virtually all of the net new jobs from the early 1980s through the end of 2007, the beginning of the past recession.

In other words, the Obama tax increases are targeted at those who are largely responsible for capital formation. Capital formation is the life blood for job creation. As jobs are created, more people pay income, Social Security and Medicare taxes. As the economy grows, corporate income tax receipts grow. Rising corporate profits provide an underpinning to the stock market, so capital gain and dividend tax collections increase. A pro-growth, low marginal personal tax rate stimulates capital formation and GDP, which triggers a higher level of tax receipts for the other sources of government revenue.

It is generally accepted that if one taxes something, one gets less of it and if something is subsidized one gets more of it. The Obama administration is also proposing an increase in taxes on capital itself in the form of higher capital gains and dividend taxes.

The historical record is clear on this as well. In 1987 the capital gains tax rate was raised to 28% from 20%. Capital gains realizations as a percent of GDP fell to 3% in 1987 from about 8% of GDP in 1986 and continued to fall to below 2% over the next several years. Conversely, the capital gains tax rate was cut in 1997, to 20% from 28% and, at the time, the forecasts were for lower revenues over the ensuing two years.

In fact, tax revenues were about $84 billion above forecast and above the level collected at the higher and earlier rate. Similarly, the capital gains tax rate was cut in 2003 to 15% from 20%. The lower rate produced a higher level of revenue than in 2002 and twice the forecasted revenue in 2005.

The Obama administration and members of Congress should study the record on how the economy reacts to changes in the tax code. The president's economic team has launched a three-pronged attack on capital: They are attacking the income group that is the most responsible for capital formation and jobs in the private sector, and then attacking the investment returns on capital formation in the form of dividends and capital gains. The out-year projections on revenues from these tax increases will prove to be phantom.

Mr. Hauser is chairman emeritus of the Hoover Institution at Stanford University and chairman of Wentworth, Hauser & Violich, a San Francisco investment management firm. He is the author of "Taxation and Economic Performance" (Hoover Press, 1996).

Lord Monckton on Climategate

The brilliant scientific advisor of former British P.M. Margaret Thatcher, whom I have had the honor of exchanging a couple of e-mails with regarding AGW, is naming names and taking no prisoners at the 2nd International Climate Conference


Lord Monckton on Climategate at the 2nd International Climate Conference from CFACT on Vimeo.

Friday, December 10, 2010

A Raw Deal For Republicans?

The President and the congressional Republicans reached a deal on Tuesday regarding extending the Bush era tax rates for all Americans.  The deal now faces stiff challenge in both legislative bodies since it drew the ire of the president's hard left, wealth redistibutionist constituency including key congressional Democrats.  Republicans, on the other hand, mostly seem to be content since the deal signals at least a temporary departure from the Keynesian policies of the administration.  Ditto with most right leaning pundits and analysts.  But, are they being a little too hasty in their glee?  Lets examine.

The conventional wisdom among those who support the deal is that it will boost economic growth and job creation as an extension of it.  Republicans got what they wanted: a two year extension of the tax rates for everyone, unchanged 15% dividend and capital gains rates, and a one year 100% expensing for business investments.  The President got his wish list: a thirteen month extension of the unemployment benefits, a one year 2% payroll witholding tax cut in return for doing away with the "making work pay" tax credits, and a partial return of the estate tax (35% on estates over $5 million as opposed to the 55% the rate would have reset at).  On the down side, there were no deals made to curb the out of control spending the government has been on for the past two plus years.

Overall, the short term winner will be the tax payers and, I would argue, the President who looks to be moderating to the independents who had deserted him and his party.  The deal, however, is full of potential pitfalls for the Republicans.  If it fails to make a substantial dent in the unemployment figures, it will put Obama in the position to be able to say that the supply side policies not only failed to work but increased our debt by almost another trillion dollars, and that will only help the Democrats in 2012. 

It is entirely possible that this deal will not be the silver bullet for our woes, thus hurt the Republican prospects in 2012.  We are in midst of a jobless recovery for a simple reason.  We do not have a credit liquidity crisis.  As also evidenced by nearly $2 trillion sitting on the sidelines, job creators - the entrepreneurs - do not have the necessary confidence in the future to expand.  Numerous surveys done by State Street Investor Confidence Index, the Conference Board, and other business groups like NFIB (that indicate continued weak, albeit somewhat improving, confidence) bear this out.  The reasons for this entrepreneurial pessimism are:

Consumer confidence - CCI remains low.  The average American consumer is still worried about job security and, until spending ramps up in a meaningful way, businesses will be in a wait-and-see mode as far as hiring permanent employees is concerned.  Jobs and spending depend on each other, thus making the current situation a temporary catch-22 until the vicious cycle can be broken.

Uncertainty of the tax picture - Temporary two year extension of the Bush tax rates for the upper bracket, which most small businesses formed as LLCs or S corporations pay their taxes on, is not a reason for any wise entrepreneur to make any significant investment requiring many more years than two to amortize.  The corporate tax rate, which is the highest effective rate among developed nations, remains the same therefore there is no added incentive for bigger businesses to expand or not to move their operations overseas.  The value of temporary tax cuts and different tax credit schemes is minimal at best.  Permanence of such tax incentives is the only surefire way of incentivizing the private sector.

Worsening regulatory environment - Regulations, except for the most essential few, are primary killers of innovation and job creation.  They often result in curbing business activity or in some cases moving them overseas to countries with more business friendly environments.  New anti-business regulations - environmental and otherwise - under the Obama administration are surging.  Come January 2011, progressives will still be in charge of the executive branch and one of the legislative branches, therefore it would be overly optimistic to expect industry to grow except in cases of cronyism with companies like G.E.  We saw the latest example of this last week with the drilling ban off the Atlantic and Pacific coasts as well as most of Gulf of Mexico waters - a purely ideological decision that will cost tens of thousands of jobs.

Possible inflation -  The only reason we do not have price inflation at the moment (other than in energy, healthcare, and some food stuffs) is that inflation is a function of not only the money supply (M2 which includes M1 plus all the savings) but velocity (economic activity) of the money supply.  In simple terms, faster the expanded money supply circulates in the economy, higher the prices will go as supply and demand principles dictate.  If this deep recession accomplished anything, it changed the spending habits of many Americans.  Extensive and persistent joblessness, a daily news item, has driven those still employed in to reevaluating their spending/saving habits.  Unemployment, combined with more savings conscious consumers, account for the relatively low velocity of the money supply.

Another way that an import based, consumption oriented economy can suffer higher prices is through the destruction of its currency.  A weak dollar means more expensive imported goods, and since we consume a lot more imported goods than domestic goods, consumers would suffer the crippling effects of price inflation irregardless of M2 or velocity variables.  This, in turn, can be corrosive to the job generating capability of our economy, as it was the case during stagflation of late1970s.

The decision of the Fed chairman Bernanke to monetize our debt under the guise of QE2 will only hasten the destruction of the dollar, which at the moment is being prevented on the most part thanks to the relative weakness of key currencies from the Euro to the Yen.

The national debt and government policy -  The U.S. national debt is at $13.8 trillion and counting.  We are running annual deficits of over a trillion dollars and the projected 10 year budget deficits looks grim without major government reforms.  Many states are also in fiscal trouble, with California (the 7th largest economy in the world) running $40 billion plus annual deficits and its humongous state pension funds going broke.  To top it all, unfunded liabilities for social security and Medicare are estimated to be around $110 trillion.

Business investment, by nature, is a long term proposition.  Robust business investment requires reasonable confidence in the future course of the economy.  To attain it, following must happen:
  • Government must get serious about reforming entitlements
  • A low tax, low regulatory environment is required for a more competitive U.S.
  • To allow a low tax environment, government spending has to be realigned consistent with a smaller, more constitutional government
  • Overall, government must become more efficient and free market oriented.
Quite contrary to the above, the administration as well as congress seem bent on trying the old and proven Keynesian policy failures, having learned nothing from Japan.

Perhaps more importantly, the current crop of politicians, including many establishment Republicans, are simply not willing to kill the goose that is laying the golden egg as they all benefit from the corrupt system of crony capitalism that we are mired in.  It remains to be seen if the new TEA Party Republicans can accomplish a bloodless coup of sorts.  Forces in Washington being what they are (special interest groups, lobbyists, etc.), the odds are stacked against them.

E.U. woes -  Finally, the debt troubles of the PIIGS (Portugal, Ireland, Italy, Greece, and Spain) threaten not only further expansion of massive social unrest that almost all EU countries are experiencing but contagion among their economies.  U.S., through their disproportionate financial support of IMF, stands to be pulled in much deeper than expected.  In fact, just last week unnamed administration officials hinted at possibility of expanding the IMF's EU bailout fund despite reservations from Germany.  This, due to our fragile fiscal situation, obviously would do further harm to our struggling economy - another in the long list of factors casting doubt on a healthy and sustained recovery on the part of entrepreneurs.

All the above reasons why the private sector is nervous and lacking confidence point to one inescapable conclusion regarding the deal struck with the President: Job creation over the next two years is likely to be insignificant barring major reforms.  Since the players, with the exception of a Republican House of Representatives, will be the same ones who, to borrow a phrase, "drove the bus in to the ditch", why would any reasonable observer expect a different result? 

I fear that overzealous, 'half a loaf is better than none' thinking congressional Republicans may just have made a raw deal for themselves and it may take the progressive wing of the Democrat party to bail them out by voting it down.

Wednesday, December 8, 2010

The Nightmare Act

Congress is poised to vote this week on contentious legislation carving a pathway to legal status for hundreds of thousands of undocumented students living in the United States.

Senate Majority Leader Harry Reid (D-Nev.) on Monday filed cloture on the DREAM Act, setting the stage for a vote as early as Wednesday morning.

Dynamics of immigration have changed drastically over the past century.  In the early part of the 20th century, the work ethics of the poor Italian and Polish immigrants is now replaced by a self-interest-above-all driven group of illegal immigrants who openly defy our laws.  Short of a blanket amnesty to 12-20 million illegals in this country, most of whom are here to not only better their lives but to milk the generous welfare state we have created, Democrats would love nothing better than bribing the youth of the modern day immigrants who are most likely to support their party, thus perhaps irreversibly tilting the electoral playing field towards their ideology.

This is a clear insult to every law abiding immigrant wannabe who has to wait years for an incompetent INS to clear their path towards U.S. citizenship.  Moreover, if it clears both chambers of the legislature, and signed by the President, the DREAM Act is surely to become the Nightmare Act for anyone who believes that rewarding illegal behavior will only increase the magnitude of it.

Eco-Diplomacy, The Chicago Way

IBD Editorials
Posted 12/06/2010

Leaked embassy dispatches show an America bribing some and threatening others to get support for a climate change accord, revealing just how weak the case for such a treaty really is.

Sometimes it is worth seeing how the sausage — or in the case of climate change, the baloney — is made. While the WikiLeaks focus has been on the leaking of classified documents, the content of some of them is revealing.

David Carrington in Britain's Guardian shows how the U.S., after failing to get a successor treaty to the failed Kyoto Protocol in Denmark, bribed, threatened and cajoled nations to get support for a "Copenhagen accord" under which nations would pledge to meet individual goals in the absence of a binding one-size-fits-all treaty.

In one instance, Hillary Clinton's State Department, acting on a request from the CIA, sent a secret cable on July 31, 2009, seeking "human intelligence" from U.N. diplomats on which nations were being naughty and which were being nice on climate change and which might be making deals to circumvent Copenhagen goals.

We were essentially seeking dirt on nations opposed to the administration's approach to fighting alleged global warming, and we were not above blackmail to get nations to comply with our position or threats that involved the cutting off of financial assistance promised to poorer nations said to be impacted by climate change.

The accord promised $30 billion in aid to these nations impacted by climate change. A Feb. 2, 2009, cable from Ethiopia reports that in a meeting between U.S. Undersecretary of State Marcia Otero and Ethiopian Prime Minister Meles Zenawi, the U.S. threatened to cut off assistance unless Ethiopia loudly backed the accord.

Zenawi, who heads the African Union's climate-change negotiations, agrees to support the accord but wonders why the threat was made after receiving personal assurances from President Obama that the promised aid would be delivered.

A Feb. 23, 2010, cable shows the Maldive Islands' ambassador-designate to the U.S., Abdul Ghafoor Mohamed, telling the U.S. deputy climate change envoy, Jonathan Pershing, to essentially "show me the money," asking for "tangible assistance" in exchange for support for the accord and noting that other nations would then see "the advantages to be gained by compliance."

The linkage between financial aid and support for the accord appeared again Feb. 11, when Pershing met with Connie Hedeguard, EU climate action commissioner, in Brussels. A cable shows her telling Pershing "the Aosis (Alliance of Small Island States) countries 'could be our best allies' given their need for financing."

Once again we are confronted with the one thing that is missing from this picture — sound science. Climate change hysteria has been generated as a means to redistribute the world's wealth and to provide a rationale for expanding government control over every aspect of our lives. But this climate Kabuki theater has little to do with saving the Earth from a real and imminent threat.

Confronted with a demonstrably cooling planet and a corrupt and fraudulent global climate-change bureaucracy, our government is reduced to bribes and coercion to cobble together a new agreement. In the absence of sound science and a rationale for committing global economic suicide, we are quite simply trying to make the world an offer it can't refuse.

Friday, December 3, 2010

U.S. Subsidizing European Socialism

By: Kerem Oner
American Thinker
December 3, 2010

If you had a child whom you discovered to be a drug addict, would you subsidize his or her drug habit?  Let me guess, if you were a responsible parent who wished for nothing more than your child to kick the habit, you would do anything but subsidize their addiction.  Unless, of course, you yourself were a hopeless addict.

According to Reuters, at least one U.S. official has indicated that we are ready to support a bigger IMF E.U. stabilization fund.  Any which way you slice it, that is U.S. tax dollars aimed at propping up the failing social democracies of Europe, folks. 

The falling european dominoes that started with Greece and Ireland is now threatening to proliferate into even larger E.U. economies in Portugal, Spain, and Italy.  No one, including the E.U. members, is disputing the fact that the fundamental reason behind all this carnage is their decades long, overly generous social democracies that have reached the tipping point of robbing Peter to pay Paul. 

Since even the German government is against expanding the stabilization fund, who better to bail european socialism out than the Obama Administration.  When it comes to socialism, it takes one to support one.

Thursday, December 2, 2010

Pigford and New Black Panthers: Friends at DOJ

Following is an article by the former DOJ whistle blower J. Christian Adams that appeared in today's Big Government web site.  Pigford II is now a done deal, awaiting only the president's signature to become the latest law that will waste tax payers money on fraudulent claims.  Payolas continue.


At the Justice Department, one man has played a central role in two of the most controversial racialist policies of the Obama Administration – Associate Attorney General Thomas Perrelli. This bundler of huge campaign contributions for the Obama Campaign is now the second highest ranking Presidential appointee at the Justice Department. Perrelli is best known for his central role in dismissing the slam dunk voter intimidation case brought and dropped against the New Black Panther Party. But the leftist Perrelli has outdone himself.

This week, the House passed a $4.6 billion payout to American Indians and black farmers as part of a settlement of alleged race discrimination claims. BigGovernment.com has reported extensively, on the “Pigford II” settlement and how it promotes fraud. Worse than fraud, it represents a race-driven political payoff by the Obama Administration to a favored political constituency.

Nothing happens in Washington like the Pigford settlement without the Justice Department. The DOJ, acting as the nation’s law firm, was intimately involved in piloting the Pigford settlement through Congress and reaching similar settlements with other identity politics plaintiffs. Perrelli ran the show at Justice in all of these efforts.

In fact, a large portion of the settlement windfall escapes Congressional approval entirely because Perreilli’s shop at DOJ also approved a similar but separate settlement with Hispanic farmers. Instead of a Congressional appropriation, Hispanic farmers will be paid out of an existing “judgment fund.”

Like the black farmers, Hispanic farmers made claims of racial discrimination in the administration of Agriculture Department loans. But Hispanic farmers added noisy street protests outside of the Justice Department’s headquarters. No wonder Perrelli’s DOJ made a settlement offer of $1.3 billion in this lawsuit. And over $680 million will flow to Indian claimants as part of the Perrelli approved “Keepseagle” lawsuit settlement.

Billions of taxpayer dollars will now flow to black, Hispanic, women and Indian farmers, or those who thought about farming. In the administration of the original Pigford settlement in the 1990’s, even city dwellers who never farmed received payouts. After all, the “discriminatory” policies discouraged them from becoming farmers.

The Justice Department usually plays hardball when it comes to monetary settlements. In fact, the DOJ lawyers, including Perrelli, have an ethical obligation to protect the interests of the United States. But like the New Black Panther dismissal, none of old rules apply anymore.

Change means change.

Perrelli became the administration cheerleader for a colossal payout to the Hispanic, Indian and black farmer claimants. And just like the Pigford and Keepseagle claimants, the New Black Panthers seemed to have friends in high places inside Justice.

Perrelli played the central role in rushing a resolution to these claims before the Republicans took control of the purse strings in January. Instead of fighting hard to limit the exposure of the United States, the claimants had a fellow traveler on the opposite side of the negotiating table.

Similarly, Perrelli was behind the dismissal of the already won DOJ case against the New Black Panthers who organized and ran an armed voter intimidation effort the day Obama was elected. Justice officials acted as advocates for the New Black Panthers more than they sought to protect the ballot box from armed thugs.

Did Perrelli’s zeal to have the case dismissed have anything to do with the New Black Panther’s endorsement of candidate Obama during the primaries?

Judicial Watch sued the DOJ under the Freedom of Information Act to obtain Black Panther documents. They uncovered stacks of emails between Perrelli and his top political lieutenants supervising the lawsuit. They reveal Justice Department political appointees, including Perrelli, intimately involved behind the scenes in driving the dismissal.

Of course the documents contradict testimony given under oath over and over again to Congress and the Civil Rights Commission that only career civil servants were involved in the dismissal. This accuracy-challenged testimony came from both Attorney General Eric Holder and Assistant Attorney General Tom Perez.

Perrelli was the Justice official most responsible for the sketchy windfall settlements to black, Indian and Hispanic farmers. Instead of protecting the interests of the United States, he helped line the pockets of the President’s closest political allies. This is hardly surprising to anyone who followed Perrelli’s central role in ensuring that the New Black Panthers escaped sanctions for armed voter intimidation. You can’t beat having friends in high places.

Mockery Of The U.S. Constitution

By: Kerem Oner
American Thinker
December 1, 2010

U.S. District Judge Norman K. Moon - a Bill Clinton appointee - in Lynchburg, Virginia, became the second judge to uphold the constitutionality of the insurance mandates of the new federal healthcare law.  The suit that was brought by Liberty University essentially argued that the mandate to buy insurance or to pay a penalty was not a proper exercise of congressional authority under the Commerce Clause of the U.S. Constitution.

In his opinion, Moon wrote,  "there is a rational basis for Congress to conclude that individuals' decisions about how and when to pay for health care are activities that in the aggregate substantially affect the interstate health care market."

Under this rationale, everything we do or refuse to do under the sun can be regulated by the government using the Commerce Clause argument.  As anyone who has been following the legal twists of this saga knows, even the Obama administration had started to give up on the Commerce Clause argument due to its weakness and was starting to focus on the government's ability to tax as the enabling constitutional argument to defend the law.  Apparently, Judge Moon is so partisan that, as a legal scholar, he could not even see past the foolishness of using the Commerce Clause as the proper constitutional argument behind this legislation. 

This opinion is just the latest mockery of what our founding fathers would have envisioned our justice system to be.  Lets hope that the judges in subsequent cases as well as the Supreme Court have a better understanding and more respect for our Constitution.