“There are times where you can afford to redecorate your house, and there are times when you need to focus on rebuilding its foundation. Today, we have to focus on foundations.” – Barack Obama, Thursday, February 26, 2009.
That’s really it. And why tax cuts to help people redecorate their houses cannot be our top priority right now. (“No tax cut built a road, no tax cut puts a cop on the street, no tax cut educates a child.” – House Finance Committee Chair Barney Frank)
This was the line of argument I tried to pursue yesterday in response to Governor Jindal’s call for more tax cuts.
Here, now, the 12 measures Newt Gingrich is putting forth to solve our problems (look for a full page Wall Street Journal ad coming soon to tout them):
- Payroll Tax Stimulus. With a temporary new tax credit to offset 50% of the payroll tax, every small business would have more money, and all Americans would take home more of what they earn.
- ☞ Yes? So? This would require tremendous borrowing from our children, and to what end? See yesterday’s five questions. How would Newt answer them? And if cutting the payroll tax in half is good, why not eliminate it altogether? And eliminate the income tax, too? Oh wait . . .
- Real Middle-Income Tax Relief. Reduce the marginal tax rate of 25% down to 15%, in effect establishing a flat-rate tax of 15% for close to 9 out of 10 American workers.
- ☞ So not eliminate it, but slash it. But again, why just down to 15%? Why not to 5%? True, this is the kind of peculiarly Republican patriotic sacrifice it’s easy to ask people to make – “please, take these tax cuts: we need you to do it so we can create jobs” – but how would it create jobs? How would Newt answer yesterday’s five questions?
- Reduce the Business Tax Rate. Match Ireland’s rate of 12.5% to keep more jobs in America.
- ☞ Somehow, American innovation and job creation did just fine for decades when the corporate rates were higher than they are today. And, of course, the effective rate most companies pay is much lower – many corporations pay zero federal tax even in years when they actually have profits to pay them on. Is this really the way to rebuild America’s infrastructure? Would American companies really not want to bid on the work that needs doing because profits are taxed? I know a dredging company just itching for a chance to unclog our nations waterways that would be eager to hire new people to take on the added work and make more profits, even though the profit is subject to tax. Rebuilding America’s infrastructure is not, by the way, something that can easily be outsourced to Ireland.
- Homeowner’s Assistance. Provide tax credit incentives to responsible home buyers so they can keep their homes.
- ☞ Outstanding – you’ve heard much the same thing from President Obama. A point of potential common ground.
- Control Spending So We Can Move to a Balanced Budget. This begins with eliminating Congressional earmarks and wasteful pork-barrel spending.
- ☞ Outstanding – you’ve heard much the same thing from President Obama. A point of potential common ground. It was shameful how earmarks exploded when the Republicans controlled Congress; shameful how they got rid of “pay-as-you-go” budgeting. Terrific to have Newt’s considerable influence on the right side of this issue.
- No State Aid Without Protection From Fraud. Require state governments to adopt anti-fraud and anti-theft policies before giving them more money.
- ☞ If Newt knows effective ways to deter theft and fraud that the states don’t – or that they do know but for some reason don’t care to implement – my only quibble is that he waited until now to sound the alarm. (If his method is simply to eliminate programs that experience any fraud, cutting off the 95% or 99% of honest, deserving recipients, then you can see how reasonable people would disagree about where to draw the line.)
- More American Energy Now. Explore for more American oil and gas and invest in affordable energy for the future, including clean coal, ethanol, nuclear power and renewable fuels.
- ☞ Another point of exciting common ground . . . if not necessarily on all the specifics. (See for example, COAL, below).
- Abolish Taxes on Capital Gains. Match China, Singapore and many other competitors. More investment in America means more jobs in America.
- ☞ Somehow, there were huge pools of venture capital available when the capital gains rate was higher than it is today. Google, Apple, IBM, Cisco, Intel, FedEx, Starbucks, Amazon – all these and thousands more were started when the rate was higher. Is there even one lone entrepreneur anywhere in America burning to start a great new business – or one potential investor looking to score big – who fails to move forward because, if he succeeded, he’d have to pay 15% or 20% in taxes on his eventual $10 million or $100 million or $1 billion bonanza? Name one such person, Newt. Seriously! Name one!
- Protect the Rights of American Workers. We must protect a worker’s right to decide by secret ballot whether to join a union, and the worker’s right to freely negotiate. Forced unionism will kill jobs in America at a time when we can’t afford to lose them.
- ☞ Agreed (at least by me). But for this not to be disingenuous, Newt needs to go along with provisions that would truly allow UNforced unionism. There is a compromise to be made here, and the status quo is not it.
- Replace Sarbanes-Oxley. This failed law is crippling entrepreneurial startups. Replace it with affordable rules that help create jobs, not destroy them.
- ☞ No question: unnecessary regulation should be dropped. Just what fits that definition is a little harder to agree on. But I’ll bet there will be a lot of receptivity to reexamining this.
- Abolish the Death Tax. Americans should work for their families, not for Washington.
- ☞ Newt is just so way too smart for this pap. (Americans should work for their families, not for Washington? So who should pay, say, for our military – Peruvians? Who should pay for our National Institutes of Health – Austrians? Who should pay for our disaster relief or the interest on our National Debt – Egyptians?)
- First off, something like 98% or 99% of Americans already are effectively exempt from any estate tax. And way back in the last century, President Clinton let it be known he’d happily adjust the tax – going immediately to a $3.5 million exemption (which is effectively $7 million with a by-past trust) and then indexing it to inflation. Those may not be the exact numbers, but it was that general range (which, with inflation, by now would have been more like $5 million and $10 million). So fewer than one in 100 estates would be affected.
- But what Newt is saying is that if you work hard and leave a $5 billion estate – or even just a $40 million estate – you shouldn’t have to throw any of your chips back into the game, we should raise the needed revenue some other way, from people less fortunate than you. And maybe he’s right, though a lot of smart wealthy people (Warren Buffett, among them) argue strenuously that he’s not.
- But job creation? A short-term stimulus to solve today’s crisis? How does he figure? The two things are completely unrelated. The only certain long-term effects would be, first, a terrible blow to charities (as it would become much less advantageous for rich people to give); second, even more concentration of wealth (someday, we could be one of those countries with just six really wealthy, powerful families, owning and controlling everything; oh, boy, I can’t wait); and, third, the aforementioned need to replace this tax revenue by taxing less wealthy, living people.
- Invest in Energy and Transportation Infrastructure. This includes a new, expanded electric power grid and a 21st century air traffic control system that will reduce delays in air travel and save passengers, employees and airlines billions of dollars per year.
- ☞ Outstanding! We’re with you all the way.
SIGNS OF PROGRESS
Thorsten Kril: “The stimulus projects are already starting here in Santa Clara county, to which $25 million has been allocated. (The first project: metering lights for highway on-ramps. It will be a big help for traffic around here.) We will have a lot of construction to make our infrastructure more efficient. And then there is $8 billion for the new high-speed rail system from LA to SFO. Some good news for a change! It’s lifting morale around here before the projects even begin. Our President’s plan makes sense, so does his vision for our country, and equally important is the rapid and relentless execution of this vision, including the new budget. You can see it all coming together.”
I have never been given even a lump, so I claim no expertise; but this 30-second spot – directed by the Coen Brothers, who gave us everything from Fargo (Best Pic ’96) to No Country for Old Men (Best Pic ’07) – will make you think twice about “clean coal.”
“I’d put my money on the sun and solar energy. What a source of power! I hope that we don’t have to wait ’til oil and coal run out before we tackle that.” – Thomas A. Edison (1847-1931)
“Florida Power & Light broke ground today on a 25-megawatt solar power plant, the Sunshine State’s first commercial-scale photovoltaic array.” – Environment and Energy Daily, February 26, 2009
All part of The Great Transition.
HONG KONG LIGHTS UP
Stephen Willey: “You might like this picture of downtown Hong Kong. If you place your cursor at the top of the photo, you’ll notice it shows 6:10 a.m. As you bring it down slowly over the photo, the pictures slowly darkens and the city lights come on. At 7:40 p.m. it’s dark. Photo technology at its best!”
Have a great weekend.
Quote of the Day
We're not trying to outsmart the smart guys. We're trying to sell bonds to the dumb guys.~alleged remark of the head of a Wall Street mortgage-bond group
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