One reason why a 9% national sales tax is a good idea

Many conservatives have questioned the portion of Herman Cain's 9-9-9 plan that calls for a 9% sales tax.  To be sure, there is a danger that a new type of tax can be subject to abuse.  But as Cain says, his proposed tax system is so simple that the people can monitor when Congress decides to raise taxes.  Now because there are so many hidden taxes and tax loopholes, we cannot discern when are taxes are being raised.

But here is why I think a 9% sales tax is a good idea:  As an attorney who has represented thousands of people over the last 32 years,  I know that there are many people who do not report all of their income.  There is a vast underground economy in this country, if my experience is any guide.  The practice is so common that the courts do not even comment on it when the issue is brought up at trial.  

I am sympathetic with people who are loathe to pay taxes, but for those who do not report income, there are others--namely wage earners--who have to take up that slack by paying higher taxes.  It is not fair to those who do report all of their income, or who are forced to report all of their income because they are W-2 employees. 

A 9% sales tax is a simple way to require those who live on unreported income to pay some federal tax. 

Barack Obama and the Democratic Congress tried to fix this problem by forcing business owners to file 1099's on most purchases, resulting in a bookkeeping and paperwork nightmare.  Public outcry forced the government to rescind that requirement.  Similarly, more IRS auditing of individual taxpayers might force more reporting of cash income, but that would require far more IRS agents and more intrusion into our lives.  And an IRS audit is expensive for both the government and individual.

So, while a national sales tax may be distasteful to many, it accomplishes one goal in a simple, non-intrusive way:  it  taxes people who do not report all of their income, without any cumbersome or intrusive mechanisms to force people to report their unreported income. 

Civility revisited

  President Obama gave an eloquent speech in Tucson on January 12, 2011 after the shooting of Representatiave Gabrielle Giffords.  In it he said   "How can we honor the fallen? How can we be true to their memory?  ....[we can remember]  we are all Americans, and that we can question each other's ideas without questioning each other's love of country" 

Earlier in 2010, when the Tea Party Movement began, Democrats called for civility on the House Floor when false reports about Tea Partiers calling Representatives racial slurs surfaced.

The Establishment Media reported endlessly about the "lack of civility"  here here here here and here which they concluded caused the Tucson tragedy.  One pundit even called for a National Civility Month, and USA Today reported that a National Civility Institute was being established by President Bill Clinton and President George H.W. Bush.  Never mind that the Tucson tragedy was perpetrated by a mentally ill assailant who had no political motive.  These articles linked the conservative Tea Party to the lack of civil discourse in this country.

How times have changed in so short a period.  First, a mere month after the Tucson tragedy, there were the decidedly uncivil  union protests in Wisconsin and elsewhere across the country.  The Establishment Media and the President were silent on the the lack of civility by union protestors. Indeed, while Obama remained mostly silent about the protests, his Secretary of Labor enthusiastically endorsed the union's methods.

Then came the Occupy movement.   Unlike the Tea Party Movement, the Occupy Movement has been characterized by physical attacks on the elderly , arson, sexual assaults anti semitism; vandalism,  zombie like shouting down speakers.    

Civility went out of fashion a mere few weeks after the Tucson tragedy, according the Establishment Media and President Obama.  A Google search of the word "Tucson tragedy civility"  reveals hundreds of stories about the need for civility in politics in the wake of the Tucson shootings.  A Google search "Occupy movement civility" reveals not one Establishment Media story linking the Occupy Movement with the need for civility in public discourse. Not one.  And of course, our eloquent President has been silent on the need for civility by the Occupy protestors.

Last night, Presidential candidates Herman Cain and Newt Gingrich provided the answer to the call for civil discourse in politics. In an historic Lincoln Douglas style debate on entitlements,  the two candidates delved into the issues of Medicare, Medicaid and Social Security entitlements, and how to save those programs for our children and grandchildren.  There were no "gotcha" moments, no personal attacks; only cordial discourse on the problems we face and solutions to those problems. If you did not see the debate,  I urge you to go to C-Span to watch it.   If we truly want civility in politics, Cain and Gringrich have demonstrated how it can work. 

The Bank Bailout Big Lie

On October 24, 2011, Occupy Oakland protestors stormed a Chase Bank, vandalizing the bank, terrifying customers and chanting "Banks got bailed out. We got sold out."  They then tried to storm a Wells Fargo Bank but the bank locked its doors.  From the Occupiers to the Main Stream Media, the myth that banks got bailed out continues.  Even Bill O'Reilly in the so-called No Spin Zone repeated the myth last night while reporting on the Occupy Oakland  raid on the banks. 

Here are the facts:  TARP (Troubled Asset Relief Program) was instituted in October 2008 to promote stability in the financial markets.  Under the program, the federal government essentially lent money to the nation's banks through various types of transacations.  The banks were required to repay the funds at the usurious rate of 15%.

TARP was also used in 2008 to bail out the insurance giant American International Group (AIG), and later during the Obama administration to bail out General Motors and Chrysler.

The Congressional Budget Office issued a report on TARP in March 2011.  The results?  The financial institutions (banks) who were lent funds from the Treasury repaid those funds with interest so that taxpayers have earned 9 billion dollars  from the banks who took TARP money.  The CBO report states:

"To provide support for financial institutions, the federal government disbursed $313 billion, most of which has already been repaid, and is projected to provide an additional $2 billion (see Table 2). CBO estimates a net gain to the government of $9 billion from those transactions."

Of course, TARP overall has lost taxpayer money, but not from banks.  The cost to taxpayers on the AIG subsidy is 14 billion, and the GM and Chrysler bailout cost is another 14 billion, according to the CBO.   But the Occupiers won't storm GM or Chrysler because those TARP funds were used to bail out the United Auto Workers.  Unions are financial supporters of the Occupy movement, so the protestors won't turn on their benefactors.  Banks, on the other hand, are easy targets because they are seen by the public as the bad guys.  The problem is that banks are essential to build a thriving economy, and demonizing banks will hurt our economic recovery.

Wendy Wilton's latest Health Care computations--even scarier than the last

The Jobs Speech the President Won't Make

The headline two years and eight months into the Obama presidency and a week before his “jobs” speech was “zero job growth in August, unemployment stuck at 9.1%”.  Unemployment is actually 2.0% higher than it was when he took office.  Policies favoring certain segments of society, and policies that promote politically correct economic activity have been the hallmark of this administration.  Unfortunately, the result is sluggish, or no, growth, a persistent high and unacceptable unemployment rate, and an unsustainable level of debt. I hope that President Obama will recognize that he needs to change course dramatically if we are to get our economy moving.  Here are some of the things the President should propose in his speech to stimulate our economy and create jobs.

The Affordable Care Act is complicated and extremely costly for tax payers and employers, and the uncertainty associated with its implementation over the next several years is creating anxiety throughout our economy as employers try to guess how the Patient Protection and Affordable Care Act will impact them.  Congress should repeal this legislation and adjust existing laws to allow health insurance companies the freedom to compete across state lines.  In order to address the problem of uninsured Americans Congress should a program of incentives and subsidies to directly attack this problem.

Our energy policy has focused on developing alternative sources of energy through tax incentives, and higher rates for consumers and businesses, while impeding the development of fossil fuel sources here in the U.S.  Alternative energy sources cannot be developed fast enough to get our economy moving. Congress should work to support development of domestic resources including coal, natural gas, and oil, with a focus on lowering the cost of energy for businesses and consumers.  This will reduce dependence on foreign oil and allow us to compete more effectively in the world economy.

The Environmental Protection Agency has promulgated many new regulations over the past few years designed to protect us from global warming and keep our air and water clean.  Unfortunately, the regulations, while well-intentioned, are hurting our economy and our competitiveness worldwide.  The President should ask for a delay in the imposition of any new regulation until its full impact on the economy can be weighed.

The National Labor Relations Board under the guise of looking out for the best interests of workers has become particularly aggressive in inserting itself into private sector business when it feels that unions have somehow been left out.  The recent lawsuit brought by the NLRB against Boeing to prevent Boeing from opening a plant in South Carolina, a right-to-work state, is an example.  The result is that the NLRB action will at best delay the opening of the plant with 2,000 workers, or, at worst, force Boeing overseas.   Obama should insist that the NLRB withdraw this suit and refrain from employing the type of union bias evidenced in this case.  Jobs are more important to Americans that union membership and representation.

The Justice Department recently announced that it is suing 17 major banks in the U.S. for their role in the mortgage debacle of 2007 and 2008. First of all, there is much blame to go around for that crisis.  Singling out the banks while ignoring the Congressional actions that contributed to the problem along with the enabling involvement of quasi government agencies like Fannie Mae and Freddie Mac is simply wrong.  Moreover, we need these banks to help get the economy going again.  That will be hard for them to accomplish that if they must operate under the cloud of litigation initiated by our own government.  The Justice Department should drop these suits and focus on ensuring that our regulatory agencies provide better oversight so that the kind of lapses that contributed to the mortgage crisis are identified sooner.  

Finally, Congress acted too quickly in attempting to prevent another financial crisis by passing the Dodd-Frank Bill without weighing its impact on the economy.   The bill is extremely complicated in itself and it will require thousands of pages of new regulations to implement it.  The banks are experiencing uncertainty and huge expenses in trying to anticipate and implement the regulations.  The result is not only that banks are adopting a defensive posture when it comes to investment and job creation, but the new costs are being passed on to consumers and businesses reducing purchasing power and capacity to invest. This bill should be repealed.   

     

Jobs are created by business people hiring workers. Business people hire workers when they have confidence in their future ability to earn profits.  Businesses respond negatively to uncertainty, overregulation, higher costs and higher taxes.  If President Obama were to announce these steps outlined here, he would unleash the American economy and we would see the kind of employment growth that he has claimed to want since he first took office.

  

Hat Tip to Vermont's Silent Cal

Powerlineblog today quoted Pres. Calvin Coolidge, one of the most underrated presidents in U.S. history.  Since Pres. Coolidge came from Vermont, Bayley Hazen Blog will use the legal right of  adverse possession to post the link.  As the Powerlineblog post notes in quoting Vermont's Cal Coolidge, our current President certainly could use Silent Cal's wisdom:

“It is a great advantage to a President, and a major source of safety to the country, for him to know that he is not a great man.  When a man begins to feel that he is the only one who can lead in this republic, he is guilty of treason to the spirit of our institutions.”

“A President cannot, with success, constantly appeal to the country.  After a time he will get no response.”

Here is Powerline's post on President Coolidge 

The Dangers of Corporatism

Solyandra is (or was) a company that made solar panels.  As such, it was a darling of the Obama administration's "green energy" initiatives.  However, after receiving $535 million dollars in taxpayer funded loan guarantees as a part of the Obama stimulus, and after a visit from the President,  it  filed for bankruptcy, laying off over 1000 workers--which of course wiped out its loan obligation, leaving Uncle Sam as guarantor holding the bag.  The Los Angeles Times, no right wing rag,  cogently editorializes about the dangers of corporatism:  the government playing favorites with certain private industries or companies.  Here is the money quote:  

Two important questions are raised by Solyndra's failure: Should the government be in the business of picking winners and losers by providing loan guarantees to risky energy ventures? And is Obama using stimulus funds to reward his political contributors?

The Times answers the first with a yes, saying that risky energy ventures need government backing.  But the second question calls into question the first:  if the government picks corporate winners and losers,  politics, no matter which party is in power, will  inevitably come into play.  Ethanol subsidies are a prime example. Costing taxpayers $6 Billion dollars a year in subsidies, and increasing food costs world wide, subsidies for ethanol have been touted as promoting green energy produced in the United States, mostly by Republicans who want to reward their electoral base in the Midwest.  Democrats like Rep. Welch want to cut the subsidy while advocating subsidies for Democratic favorites like solar power and high speed rail. Powerful lobbyists for these  industries are ensconced permanently in Washington D.C.  The losers?  as usual, the taxpayers.  But other losers are small businesses who are struggling without grants or subsidies because, while they are providing a service or product to the public,  are not on the government's favorites list either because they are not part of the latest fad in Washington, or they cannot afford to employ lobbyists to grab some of Washington's largess.