Some People Just Hate the Rich

In a highly publicized appearance, at least it was around here, Glenn Beck spoke at the Michigan Chamber of Commerce Future Forum, he was the keynote speaker at the dinner. The Chamber doesn’t just pull speakers from the right side of the aisle either, Mark Brewer, the head of the Michigan Democratic Party, was last year’s keynote speaker.

The Michigan State College Democrats decided to protest Beck. Why? I’m not quite sure. They say it was because of his comment calling Obama a “racist” but then I have to imagine they didn’t hear Beck’s defense and actually listen to Beck explain himself.

I have no problem with people protesting someone, I’ve done it before, but when I show up to a protest (especially when it’s against an individual) I make damn sure that I know why I’m there. I make damn sure that I know what that person has said and what that person has done to make me drive to where ever they are and hold up a sign.

The College Democrats apparently don’t share my same work ethic.

They kinda went because, well, Glenn Beck’s a conservative, and they’re not. Mitchell Rivard, the president of the College Democrats (and for the record a huge Obama hack), couldn’t resist saying that Glenn Beck spreads “republican lies.”

Oh really? I’m going to go out on a limb here and say that Rivard has never watched or listened to Beck’s program. After all, if he did he would certainly pick up on Beck’s pattern of saying the problem in Washington is corruption on both sides of the aisle. If he did listen to Beck’s program he would have heard Beck speak out against Bush’s commutation of Scooter Libby. If he would have listened to Beck’s program he would have hard him scream at the republicans over their handling of illegal immigration.

Glenn Beck is not a political hack. There are some people that blindly follow the two parties in this country. Those are the people we can blame for the situation we are in. Mitchell Rivard is a perfect example of that type of person, he can’t generate a political thought for himself unless it’s fed to him from the democratic party.

I think what was most disturbing about the protest was the hate that was displayed for the well off in this country. There was a group of protesters “dressed up” as stereotypical rich people and saying things that “stereotypical” rich people would say. Here’s a video clip:

Boy, nothing like stereotyping a whole class of people. What other group in this country could you stereotype and poke fun of like that? Would it be okay if I got a group of people together to protest someone and we all dressed in rags with aluminum cups tied to our forearms and played musical instruments for money? I’m thinkin’ that would be frowned upon.

These people hate the rich, and they’ve been groomed to believe that all rich people are snotty self serving scumbags that don’t care about anyone outside of their 10,000 square foot homes. You can thank the media and Hollywood for that stereotype.

Because of this perverted view of the affluent, the democrats feel the need to “penalize” them by taking their money and giving it to those they have “hurt.” While they steal money from the wealthy they also get to make fun of them, dressing up like them and saying things that they supposedly say.

Aren’t these the people that love everyone? Isn’t this the party of bipartisanship and change? What happened to that? Oh yeah, it was a load of crap.

What the left doesn’t seem to realize is how much our government relies on the wealthy. The top 1% of earners pay 40% of all income taxes, if they just disappeared Uncle Sam would be out billions of dollars.

When the left wants a new social program where do they go? The wealthy. What happens if the wealthy aren’t there? If you eliminate the wealthy do the underprivileged suddenly obtain health insurance? No. So who’s going to pay for it?

Instead of mocking the rich the left should be praising them. If there were no wealthy people who would be giving to charities? Who would be paying 50% of all taxes? Who would providing capital for a new business? Without the wealthy the government would simply crumble.

And I can’t forget the massive hypocrisy of these protesters. After all, it’s the liberals who make more than conservatives. That’s a pesky little fact the left can’t stand. And oh yeah, that government the liberals love so much, there’s a reason the Senate is often described as a “Millionaires Club.”

One final point to address. In the clip the protesters jokingly call for the privatization of police, fire departments and schools. With the exception of schools, that’s absurd. It’s clearly outlined in the constitution that government is tasked with protecting the people (that would be fire departments and police departments), no where does it say they are tasked with the health of the nation. The argument is not about straight up socialism and doing away with anything that might come close to it, the argument is about what the role of government is. And the role of government is not to provide health care for all.

–jb

The Current #137

The Current #137
Hosts: Jacob Bodnar and Logan Sparrow

Topics (bolded topics are available as separate audio segments below): Obama/Cheney spar on torture and Gitmo, Pentagon report shows 1 in 7 Gitmo detainees went back to terrorism, Pelosi stonewalls question on CIA comments, lawmakers divided on whether Pelosi knew or not, 12 of 16 Congressmen under investigation are democrats, US close to losing AAA rating, Obama says we’re running out of money, GM to head into bankruptcy, Obama’s new fuel standards, Republicans happier than Democrats, Gaffama of the week, Paid Vacation act introduced, and Woman hand cuffed and fined for not holding escalator rail.

The word of the week is Torture…and Gitmo
Barack Obama and former Vice President Dick Cheney had competing speeches this week about torture and Guantanamo Bay. Both speeches were opposite of each other. Obama said that torture didn’t work and we need to shut down Gitmo, Cheney said torture worked and Gitmo needs to remain open. What specifically did each have to say, and who’s right?
[audio:http://www.thecurrentpodcast.com/episodes/segments/obama_cheney137.mp3]

We’re out of Money but don’t worry I’m Spending More
It was released this week that the United States is dangerously close to losing it’s AAA rating. Secretary of Treasury Timothy Geithner has correctly said we need to lower the deficit, but he didn’t mention spending cuts just “policies” that need to be adjusted. Could he be talking tax increases? Probably. Also, Obama said this week we’ve run out of money and then tried to defend spending billions more on health care. Listen to how he’s trying to deceive the public about our debt.
[audio:http://www.thecurrentpodcast.com/episodes/segments/deficit_spending137.mp3]

The Real Criminals
Ya know the handrails on escalators, who really uses those? Well apparently if you’re in Montreal, Canada and you don’t use them you can be fined upwards of $100. Just ask Bela Kosoian, she wasn’t just fined $100 she was placed in a “small holding cell” as well. All for not holding the rail.
[audio:http://www.thecurrentpodcast.com/episodes/segments/escalator_fine137.mp3]

You’ll hear all those topic and much more in the full episode.

FULL EPISODE
[audio:http://www.thecurrentpodcast.com/episodes/thecurrentep137_96.mp3]

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Tax Compeition: Why the U.S. is Losing

On the campaign trail, Obama was very sneaky about his tax plan for corporations.

He shouted in the streets that he was going to lower taxes for 95% of Americans, but when the issue of corporate tax came up his words were very calculated.

He was asked flat out in a debate about the United State’s corporate income tax rate, which is the second highest in the world. He shrugged off the question saying that while the percent was high, corporations usually used tax loopholes to avoid paying the full rate.

I guess he doesn’t realize that when you close these loopholes you are effectively raising the rate. If closing the supposed “loopholes” was met with a lowering of the rate, it would at least make sense.

But as we’ve realized in his first 100 days in office, common sense isn’t really Obama’s strong point. He proved that Monday by unveiling plans to tax profits on company’s foreign subsidiaries at the full 35% rate. I warned about this during the campaign, and it’s coming to fruition.

Much of Mr. Obama’s plan aims to limit what the president considers the tax avoidance of multinational corporations who use subsidiaries and foreign branches to exploit tax code loopholes.

The White House argued that 83 of the 100 largest U.S. corporations have subsidiaries in tax havens, citing a government report, and that in 2004 the largest corporations paid about $16 billion, or a tax rate of about 2.3 percent, on $700 billion in profits.

The White House makes it sound as if corporations having subsidiaries in tax haves (an area with low taxes) is somehow a crime. It’s simply smart business on the company’s part. They want to keep as much money as possible, why wouldn’t they setup shop in a tax heaven, that’s common sense.

If anything that report shows that we’re losing the tax competition. The government has to realize that we’re operating in a global economy, and the invention of countless technologies makes it easier and cheaper to move a business from one country to another.

When it comes to taxes the government acts as if we’re still in the industrial and agricultural years, where companies couldn’t move business either because it was too expense or because their industry wasn’t available in another country. However, we’re living in the digital age, where business is more about information and less about industry or agriculture. Not only is it cheaper to move a business around the world, the advent of business built around information has eliminated ties between businesses and countries (such as natural or human resources).

Because those ties are broken, countries are on a more level playing field. Corporations are basing their location on where it will be cheapest to operate. The government doesn’t understand this. They don’t grasp the idea that a corporation can pack up and leave at anytime. Even a corporation that uses natural resources (such as Exxon) could move their world headquarters somewhere else quite easily.

The reason U.S. based corporations have subsidiaries in tax havens is not because they want to stiff the government, it’s because it’s cheaper to operate there. Country’s with low corporate taxes understand that most corporations are built around information and thus can operate in virtually any country with electricity and an internet connection. The U.S. has failed to realize this simple fact.

Let me give you the gist of Obama’s plan. He wants to tax all of the profit made from foreign subsidiaries of U.S. based businesses at the corporate income tax rate of 35%. Currently that profit is only taxed at that rate if the money is brought back to the United States. If a company decides they’d like to keep that money in the foreign subsidiary they can do so but they will be subject to the foreign country’s tax rate.

The current system provides a massive disincentive to reinvest money in the United States. After all, we have the second highest corporate tax rate in the world, unless the foreign subsidiary is based in Japan, that company would face less taxes keeping it outside of the United States.

We obviously want that money to come back to the U.S. and be reinvested in American jobs. But when a company is faced with the decision to be taxed at 35% or something lower, they usually go with the lower value.

The solution is simple, and it’s already been test.

In 2004 we ran a trial on a new tax rate for foreign subsidiary money brought back to the States. Instead of taxing it at 35% we taxed it 5.25%. The results were staggering. An estimated $362 billion flooded back from U.S. based businesses, and the federal government saw tax revenues of $18 billion from the new tax.

If we lower the rate for foreign subsidiary money, business will bring the money back to the States, that’s already been proven. But Obama has gone the opposite route, he wants to tax that money regardless of if it comes back or not. The idea is absurd and it will only put another tax burden on corporations that employ millions of Americans.

If our government doesn’t wake up to the realities of the digital age, we are bound to lose the tax competition.

–jb

Task Force Fever

I’ve mentioned several times that Obama is becoming not only a “teleprompter president,” but also a “task force president.” This is also known as a “committee president.”

Surely presidents need to bring the best minds on topics together to solve problems. But it has gotten to a point where he is simply delegating his responsibilities to a bunch of unelected groups of people, forcing them to develop the difficult, and possibly wrong, solutions and not him.

Today Obama announced yet another task force, I believe this is number five or six. This time it’s about taxes.

President Barack Obama is putting former Federal Reserve Chairman Paul Volcker in charge of a tax- code review aimed at closing loopholes, streamlining the law and generating revenue, budget director Peter Orszag said.

Hmmm…what might this group recommend if one of their goals is “generating revenue?” There are two ways the government can “generate” more revenue from taxes (besides lowering them), that’s raising them, and increasing the tax base. Considering the government can’t magically create more people, “generating revenue” must mean that someone’s taxes are going up.

Orszag said the review, given a deadline of Dec. 4, is being ordered to make recommendations on steps to simplify the code, built over the last 96 years, in ways that would reduce tax evasion and what he called “corporate welfare.”

The only way you’re going to simplify the tax code is by instituting an entirely new system, such as the fair tax. But something tells me this task force won’t be reporting that as a solution.

And am I the only one that thinks December 4 is a long time to for this task force to review the tax code? I mean I understand that it’s long and cumbersome and very, very confusing, but come on, they can hash it out by at least September. Not to mention any recommendations they may report wouldn’t be available to the taxpayer until 2011.

Here’s what Obama, and apparently Orszag, don’t understand about their vision of corporate taxes. Orszag is speaking of “corporate welfare” in a country that has the second highest corporate tax rate in the world. On the campaign trail McCain spoke of lowering the corporate tax rate to 25%. Obama brushed off lowering the rate and said we have to worry about “closing the loopholes” first. What he didn’t realize, or doesn’t care about, is that closing any corporate tax loopholes would in effect be a tax increase. So if you’re going to “close the loopholes” you have to lower the rate to stay competitive.

The other tax issue Obama, Orszag, and Volcker seem unclear about is who actually pays taxes.

“There are hundreds of billions of dollars in uncollected taxes each year,” Orszag said in a conference call. The Volcker board “will be examining ways of being even more aggressive on reducing the tax gap.”

So this task force will also look at “reducing the tax gap.” According to Orszag, at least based on the context of this sentence, corporations get off scott free on taxes, while poor lower class Americans have to pay up the nose. Obama believes that the rich and corporations don’t pay enough taxes, and the lower class pays too much taxes.

For starters I believe everyone pays too much taxes. But Obama’s view on the tax system is backwards. 40% of Americans don’t pay taxes, and that 40% is not from the top, it’s the people who pay taxes, and then get it all back in rebates. It’s the top 1% of Americans that pay 39% of all taxes. If Obama was truly concerned about “reducing the tax gap” he’d make sure those “billions of dollars in uncollected taxes” were coming from the people who don’t pay any, not corporations through various “loopholes.”

But again, I have a feeling this task force won’t be coming up with that solution.

Oh well, maybe in a few months he’ll create another one to tackle that problem.

–jb

Bailout Brouhaha UPDATE: Positive News

I’m running out of alliterations for the bailout, but I’ll see what I can continue to come up with.

I want to take a quick walk down memory lane and listen to the words of Nancy Pelosi from October 2. This was after the Senate version of the bailout bill was passed by the House. Pelosi touts the protection the bill includes for taxpayers by enforcing strict oversight on the process.

Well so much for that.

In the six weeks since lawmakers approved the Treasury’s massive bailout of financial firms, the government has poured money into the country’s largest banks, recruited smaller banks into the program and repeatedly widened its scope to cover yet other types of businesses, from insurers to consumer lenders.

Along the way, the Bush administration has committed $290 billion of the $700 billion rescue package.

Yet for all this activity, no formal action has been taken to fill the independent oversight posts established by Congress when it approved the bailout to prevent corruption and government waste. Nor has the first monitoring report required by lawmakers been completed, though the initial deadline has passed.

So not only have the positions on the oversight board not been filled, but the deadline for the first monitoring report has gone and past. Yet Pelosi was adamant about the strict oversight the government would have on this process.

So where was Pelosi yesterday, when Henry Paulson announced that he didn’t like the idea of buying trouble assets, he wanted to buy actual stock in banks. Of course that move went completely against the intentions of the bill, after all it was titled the Troubled Assets Relief Program, however Paulson was permitted to make that move because of the wiggle room included.

So where was Pelosi’s statement? The top story on her website is a picture of her snuggling with students from the San Francisco Life Learning Academy during their recent visit to D.C.

On the same note, where was the republican outcry. This was a bill that they supposedly reluctantly passed because this was an “urgent” crisis. Why aren’t they outraged by the bait and switch Paulson has pulled on the American people?

The White House isn’t in the clear either. The Bush Administration was suppose to appoint a special inspector general to watch over the process. It’s been six weeks since the bill has passed, where’s this inspector at? Is the Bush White House interviewing people now? What’s taking so long?

This is why the whole idea of spending $700 billion was a dumb plan. Forget the fact that we don’t have the money, the sheer volume of such a blank check to the Treasury makes it extraordinarily difficult, if not impossible, to impose necessary oversight.

So you ask, “alight Jacob stop whining and give me some solutions!” Okay, okay, calm down. I’ve written about some ideas before but bear in mind, I am no economist. I’m a college freshman, I don’t claim to know much about the economy and how to fix it, but from listening to smart people and applying some simple common sense, I’ve come up with a few ideas.

1.) Lower the Corporate Tax Rate to 25% or lower – This one is a no brainer. Corporations pay too much tax in this country. Let’s take a quick look at ten countries with the lowest corporate taxes, in order they are; Vanuatu, Maldives, Qatar, UAE, Kuwait, Saudi Arabia, Bahrain, Zambia, West Bank Gaza, and Botswana.

Omitting West Bank, because their economy is the worst in the world which is completely out of step with the other nine, the average GDP growth of those countries is 5.91%, nearly three times higher than the GDP growth of the United States (when comparing numbers from 2007 to 2008).

The seven fastest growing economies in the world (in order, based on GDP growth); Azerbaijan, Bhutan, Timor-Leste, Angola, Armenia, Equatorial Guinea, and Georgia, all have a lower statutory corporate tax rate than the United States.

Now obviously the tax rate in these countries isn’t the only factor for their economic boom. Most of these countries rely on only a few exports as their economic engine. But the sheer fact that a country like Azerbaijan, which I doubt any of you have heard of, has a lower tax rate than the United States and has a GDP growth of 23%, is embarrassing.

2.) Lower the foreign profits tax (I made up the name, but the tax exists) – When a U.S. based company owns a foreign subsidiary they have two options when allocating the profit. One, leave it in the foreign country and be subject to their corporate income tax. Or two, bring it back to the United States and be subject to our corporate income tax. Seeing as how the United States has the second highest corporate tax rate in the world, most companies opt to leave it in the originating country.

This is a problem. U.S. based companies are investing in foreign countries rather than the United States. So in 2004 we experimented, and lowered the tax rate on foreign profits to 5.25%. The result was over $390 billion of cash being brought to the States and somewhere in the neighborhood of $14 billion in tax revenue for the government.

We need to go back to the 5.25% rate. Its success was wild, and with many auto makers owning foreign subsidiary companies, they would begin to bring some of that profit back here, and reinvest it in America.

3.) Lower the capital gains tax – History has proven that when the capital gains tax is low, the government makes more in tax revenue. When the capital gains tax is high…well…you get the picture. This goes back to giving money to the people who know how to spend it best, the ones who earned it.

4.) Cut spending – If we’re going to lower all these taxes it will more than likely decrease tax revenues, if for no other reason than people aren’t making many capital gains currently and businesses have less money to bring over to the states. We need to cut government spending and it starts with the entitlement programs (after all that makes up 34% of the budget). Then we need to freeze spending, take a good long look in the mirror, and find programs and salaries and jobs in the government we can cut. It won’t be easy but it’ll have a domino effect on the economy.

So there’s my very simplified fix to this crisis. Obviously more can be done, and needs to be done, but hey, that’s a start.

UPDATE: I mentioned the muteness from Capitol Hill on Paulson’s bait and switch on the American people. Well, there’s at least three Senators who have voiced concern over the change. Tom Coburn, Richard Burr, and David Vitter have sent a letter to Paulson voicing their dissent to his decision. Michelle Malkin has the letter.

–jb

The Bodcast #20

On tonight’s Bodcast I talk a look at Barack Obama’s first press conference and one of the most interesting people standing behind him…cough cough…Jennifer Granholm.

I also discuss why raising taxes right now is absurd and how the government has screwed up their picture perfect situation.

[audio:http://www.thecurrentpodcast.com/bodcast/audio/bodcast_20.mp3]

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