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Archive for February, 2013

If you’re an amoral person with political connections, it’s possible to make a lot of money.

Warren Buffett lined his pockets by making a government-subsidized investment in Goldman Sachs during the financial crisis.

The rest of us suffered and he got richer, but the left seems to be okay with that perverse form of redistribution because he supports class-warfare tax hikes. Sort of like buying an indulgence in the Middle Ages.

Hey, nice work if you can get it.

But Buffett may be an amateur compared to the crony capitalists at Citigroup.

The just-confirmed Treasury Secretary Jack Lew was given a huge bonus for leaving Citigroup several years ago. Did the company give Lew a bonus because they were happy to shed his $1.1 million salary after he presided over gigantic losses at the firm’s alternative investments division?

Don’t be silly. He was showered with money specifically for leaving the company to take a “high level position with the United States government”

Again, nice work if you can get it.

But Lew’s loot is pocket change compared to the $115 million that former Clinton Treasury Secretary Robert Rubin received for helping to steer the company into financial collapse.

So is this evidence that the private sector is systematically stupid?

I wish that was the explanation.

Instead, this is tragic evidence that it’s possible to “earn” a very high return when you “invest” in cronyism.

Big Bank SubsidyAccording to the Treasury Department’s Special Inspector General, Citigroup got $45 billion of TARP handouts and $301 billion of guarantees.

Not to mention an estimated $13.4 billion subsidy thanks to the government’s too-big-to-fail policy.

Since we’re talking apples and oranges, I have no idea how to compare the value of the payments to Lew and Rubin with the value of all the handouts and subsidies that Citigroup got (and is still getting) from taxpayers.

But I do know that mere mortals like you and me don’t have a prayer of “earning” the incredibly high returns that Citigroup received by “investing” in Robert Rubin and Jack Lew.

And let’s not forget what Goldman Sachs “earned” by “investing” in the previous Treasury Secretary, Tim Geithner.

Hey, nice work if you can get it.

And you can even be absolved of your sins by supporting higher taxes! What’s not to love. You get millions of dollars that you could never earn in a genuinely capitalist economy, and all you have to do is agree to give back an extra 5 percent or so if tax rates go up.

But if you’re someone like Tim Geithner, maybe you can avoid the extra burden by cheating on your taxes. Of course, you’ll be taking a risk of having your wrist slapped if you get caught. And that can really sting for 10 seconds.

Remember, rules and laws are for the peasants, not the cronyist 1 percent.

Nice work if you can get it.

And there are lots of opportunities for unjust enrichment, as explained in this video.

The moral of the story is…well, that you should be a libertarian if you want to be a decent person and not reward those who are indecent.

P.S. At least Jack Lew has now shown us that it’s perfectly fine to invest in the Cayman Islands and benefit from tax competition.

But only if you’re an insider, of course. Nice work if you can get it.

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I realize the sequester kicks in tomorrow and I should be writing about that rare opportunity to control the burden of government spending.

To be sure, my fingers are crossed that Republicans won’t snatch defeat from the jaws of victory, and I’ve been busy on Capitol Hill talking to folks about the issue, but this post already says everything you need to know about that topic.

It’s time to switch gears, particularly since I have a soft spot for feel-good stories.

And what could be more heart-tugging than a story about the right to keep and bear tanks?

Here are some blurbs from the Wall Street Journal.

Weapons buffs may stock semiautomatics in the gun safe. But nothing makes a statement like having an Army tank in the garage. …there are several hundred to 1,000 private tank owners in the U.S. …Brothers Ken and Gene Neal, owners of Bullet Proof Diesel, a truck-parts manufacturer in Mesa, Ariz., once took their 1966 British Chieftain tank into the desert and joyfully backed it over a rusty car. When their insurance agent inquired about their plans for the tank, the Neal brothers emailed back, “We are going to use it to take over the world.” Says Ken Neal, 45: “A tank is cool.”

Private Tank

The latest in home defense

But is it legal?

Yup, and it can even have a working gun if you’re willing to fork over $200 for a permit.

A tank in the U.S. can have operational guns, if the owner has a federal Destructive Device permit, and state laws don’t prohibit it. The permit costs $200, and the applicant must swear he hasn’t been a “fugitive from justice,” “adjudicated mentally defective” or convicted of “a misdemeanor crime of domestic violence.” A local law-enforcement official, usually a sheriff or police chief, has to sign off on the application. Tanks generally aren’t street-legal, so owners usually drive them off-road or on other private property. Some say local authorities sometimes make exceptions for parades, a quick test drive or a trip to the gas station.

But won’t tanks in private hands lead to horrible crimes? Doesn’t seem that way, particularly since the story mentions that the only tank used in a crime was one taken from a government armory.

And in sensible places such as Texas, local police think a tank is “awesome,” not a cause for hysteria.

Earlier this month, Mr. Bauer, the Texas banker, took his Chaffee out for a spin in his warehouse parking lot. He had rigged the .50-caliber machine gun on the turret with a propane system that generates the noise and muzzle flash of gunfire, without the bullets. He fired off several bursts. Minutes later, two Port Lavaca police cruisers pulled up. The first officer rolled down the window and asked dryly: “You know why we’re here, right?” Mr. Bauer assured him that no actual rounds had been fired. …The second policeman, Jeremy Marshall, got out of his car and eyeballed Mr. Bauer’s tank. “Awesome,” he said.

Meanwhile, a 6-year old boy in Maryland is suspended for making a gun shape with his fingers and a 5-year old girl in Pennsylvania is busted for having a pink plastic gun that shoots bubbles.

The best of America…and the worst of America.

But we shouldn’t be resting on our laurels. Most able-bodied men in Switzerland have fully automatic guns (i.e., capable of continuous firing) in their homes, so it’s an open question which nation is more “awesome.”

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I shared some sequester cartoons last month, but I didn’t think they hit the nail on the head.

As regular readers know, I want the message to be focused.

  1. The problem is spending, not deficits.
  2. Government is too big.
  3. The sequester is a good thing, albeit too small.
  4. Obama and the other politicians are engaging in hysterical hyperbole to protect special-interest spending.

I think that message is slowly sinking in, which is why I was much happier about the next batch of sequester cartoons.

Now we have an embarrassment of riches. Enjoy (and widely share) this set of cartoons.

We’ll start with Michael Ramirez, who uses pie charts to show how much bigger government is today and how the sequester is just crumbs.

Sequester Cartoon Ramirez 3

And here’s one from Ed Gamble showing the President engaging in fear tactics, though both Ramirez and Gamble are wrong about the “cuts.” The sequester cuts $85 billion of “budget authority,” but that translates into only $44 billion of “budget outlays.”

That’s just 1.2 percent of FY2013 spending. And remember that this means spending will still go up compared to FY2012 – as I explained in my most recent interview.

Sequester Cartoon Gamble 3

Here’s a cartoon from Gary Varvel, which is quite similar to an excellent cartoon he produced last year.

Sequester Cartoon Varvel 3

Here’s one from Glenn McCoy, poking fun at Obama for taking everything in stride…except when something happens to threaten the amount of waste in Washington.

Sequester Cartoon McCoy 3

I’m especially fond of this Glenn Foden cartoon since I’m sick and tired of the absurd hyperbole from the interest groups in DC.

Makes me wish I could bop a few Chicken Little characters on the head.

Sequester Cartoon Foden 3

Here’s one from A.F. Branco, which I also like because it simultaneously mocks Obama’s Keynesian mindset while showing that the real danger is an ever-rising burden of government spending.

Sequester Cartoon Branco 3

Last but not least, Lisa Benson makes fun of Obama for his never-ending efforts to instill panic.

Sequester Cartoon Benson 3

Let’s keep our fingers crossed that the sequester happens on March 1. Then, even if the Obama Administration deliberately tries to cause inconvenience for the American people, we’ll see that the world doesn’t come to an end.

Who knows, maybe that will even lead lawmakers to think they can impose some real fiscal restraint, as we’ve recently seen in countries like Estonia and in the 1990s by nations such as Canada and New Zealand.

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I’m normally not a fan of the media, but every so often you find examples of real journalism. Here are some powerful, well-done stories from local TV stations.

  1. Exposing the plethora of benefits available to those who want government-subsidized idleness.
  2. Exposing how eminent domain laws are used to screw poor people out of their property.
  3. Exposing local government officials engaged in a witch hunt against an innocent man.

Newspapers also sometimes speak truth to power.

  1. A Michigan newspaper exposing how motorists were getting ripped off by illegal speed limits.
  2. A Pennsylvania newspaper exposing how a local bureaucrat  union tried to stop a boy scout from improving a local park.
  3. A New York newspaper exposing the education establishment for giving teachers $100,000-plus salaries for doing nothing.

Now I can add another story to the list. A local TV station in Washington, DC (with a viewing audience of countless overpaid bureaucrats) had the courage to run a story debunking sequester hysteria.

I’m partial to this report for the obvious reason that it featured me.

But even if this story didn’t use any of my soundbites, it would still be worth sharing because it’s not often that you see a reporter explain Washington’s dishonest way of measuring “spending cuts.”

I’ve complained about that sleazy tactic while appearing with John Stossel and Judge Napolitano, but I didn’t think a regular journalist would ever expose the scam.

The latter part of the report focuses on the potential impact of sequestration on the defense budget.

I’ve previously explained that the defense budget is disproportionately impacted, but I’ve also cited Cato’s military experts when arguing that our national security will not be endangered.

Indeed, military spending will be higher at the end of the 10-year period than it is today.

Now I want to share this amazing info-graphic prepared by Zach Graves, another Cato colleague.

Zach Defense

A thorough and compelling collection of data. It belongs in the visual-impact Hall of Fame with these gems.

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A Warning from Ronald Reagan

If you want some inspiration from Ronald Reagan, these brief remarks reveal his understanding of both economics of history (especially with regards to the other great president of the 20th century).

And this short video excerpt also gets me fired up to fight big government.

But maybe it’s also time to share a warning from the Gipper. Here’s a quote (which I’ve verified since not everything that lands in my inbox is necessarily accurate) about the perils of government dependency.

Reagan Slave Quote

This actually overstates the competence of government.

Communist nations, after all, didn’t do a very good job at providing food, shelter, and healthcare. Though, to be fair, there were quite proficient at turning people into slaves and prisoners.

We have a reverse problem in today’s welfare states. The people who produce the most are being coerced into turning over 50 percent of their earnings, which is sort of akin to the way the nobility treated serfs in medieval times.

Meanwhile, the “slaves” and “prisoners” wind up living rather comfortable lives, oftentimes bribed into government dependency because they can enjoy higher living standards by mooching rather than working.

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Even though it changed the terms of the political debate, thus giving them a majority in the 2010 elections, many in the Republican establishment deeply resent the Tea Party. They don’t like being monitored by taxpayer-friendly groups that will expose them when they side with special interests (as they have in recent months on Export-Import Bank subsides and housing handouts).

And they really hate the idea of being held accountable at the polls when they side with the corrupt big-spenders in Washington. Just ask Senator Bennett and Congressman Inglis.

Pork...or principles?

Pork…or principles?

Now the Washington establishment is fighting back. Karl Rove, best known for helping to steer the Bush Administration in favor of statist policies that led to the disastrous elections of 2006 and 2008, even has created a PAC to oppose the Tea Party.

But this seems like a very childish and self-destructive approach. According to some scholarly research, the Tea Party has made a big difference, both in terms of generating more votes for the GOP and in terms of pressuring Republicans to side more with taxpayers rather than the inside-the-beltway interest groups.

Here are some intriguing details from the new academic study.

We use data from a large number of sources to measure the influence of the Tax Day protests on the Tea Party. …We show that these political protests and the movements they built affected policymaking and voting behavior as well. Incumbent representatives vote more conservatively following large protests in their district… Larger protests increase turnout in the 2010 elections, primarily favoring Republican candidates. We find evidence of sizable effects. In particular, our baseline estimate shows that every Tea Party protester corresponds to a 14 vote increase in the number of Republican votes. Our most conservative estimate lowers that number to 7. The Tea Party protests therefore seem to cause a shift to the right in terms of policymaking, both directly and through the selection of politicians in elections.

Seems like a GOP political consultant should be very pleased with this research (assuming, of course, that they’re motivated by Republican and conservative victories rather than their own influence and contracts).

Want some more evidence that the Tea Party has made a difference? Well, check out these excerpts from a story in The Atlantic complaining about the lack of action in the Senate and ask yourself whether the addition of Senators like Rand Paul, Mike Lee, Marco Rubio, Ron Johnson, and Pat Toomey might be one of the reasons why Obama’s agenda has been stalemated.

Here’s an impressive fact about life in today’s Washington: The last time a major new piece of policy legislation passed the U.S. Senate was July 15, 2010. That’s when the Dodd-Frank financial-reform bill came through the Senate. And it was 951 days ago. If you’re wondering whether President Obama’s ambitious second-term agenda has a chance to make it through Congress, this little fact might be worth keeping in mind. …the Senate…hasn’t done anything the president could add to his list of policy accomplishments. For that — the kind of thing a president might talk about in his campaign speeches — it’s been more than two and a half years.

It’s now been more than 951 days, and let’s be thankful with every passing second. A “do-nothing” Congress is a very good thing if the only other option is to pass monstrosities such as Obamacare and Keynesian spending schemes.

Keep in mind, by the way, that there are now more Tea Party-oriented Senators such as Tim Scott, Ted Cruz, and Jeff Flake.

To conclude, I’m not under any illusion that the Tea Party automatically means better politicians and/or better election results. But every advocate of tax reform and smaller government should be very happy that there are people in the country who are pressuring politicians to adhere to libertarian-ish principles rather than playing the corrupt Washington game.

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The number one goal for fiscal policy is to reduce the burden of government spending.

The simple way to achieve this goal is to adhere to Mitchell’s Golden Rule and and make sure the private sector grows faster than the public sector.

But when politicians fail to exercise that modest amount of fiscal restraint, bad things happen.

Consider my state of Virginia, which is largely controlled by Republicans. Except party labels apparently don’t mean much because state spending has been growing at twice the rate of inflation.

Virginia State Spending

And when politicians engage in profligacy on the spending side of the fiscal ledger, it’s just a matter of time before they engage in greed on the other side of the fiscal ledger.

That’s certainly happened in Virginia, where the interest groups, lobbyists, bureaucrats, and politicians just achieved a major victory over taxpayers.

The Wall Street Journal is appropriately disappointed.

"I hope you're not upset that I'm copying your fiscal policy, Mr. President"

“I hope you’re not upset that I’m copying your fiscal policy, Mr. President”

There’s one thing uglier than a Democratic tax-and-spend spree. A Republican one. On Friday Virginia Governor Bob McDonnell and a GOP-run legislature approved a five-year, $6 billion transportation bill financed almost entirely with higher sales and car taxes.

Here are some of the grim details.

The sales tax rises to 6% from 5% in Hampton Roads and populous Northern Virginia and to 5.3% everywhere else. The hated car tax (which Republicans once vowed to eliminate) rises to 4.3% from 3%, meaning a new $30,000 car or truck will come with a $1,290 tax bill. Then there’s a new 0.25% sales tax on homes in Northern Virginia, plus a new hotel tax.

More taxes, not surprisingly, will mean more spending.

Mr. McDonnell even cut an 11th-hour deal with Democrats over the expansion of Medicaid under ObamaCare. …Mr. McDonnell says the commission means Virginia won’t expand Medicaid as long as Republicans control the legislature, but wait until the hospital lobby gets done working the same Republicans who raised taxes.

The governor doubtlessly has made lots of friends with the interest groups that dominate Richmond, so he’ll have plenty of opportunities to cash in when he leaves office.

The state’s taxpayers, by contrast, won’t be so lucky. And now the GOP is now divided and dispirited and will face an uphill battle in this November’s elections.

This fiasco will haunt Republicans in a state that holds elections in November. Probable Democratic nominee for Governor Terry McAuliffe endorsed the bill knowing it erases any GOP advantage on taxes and spending. Mr. Cuccinelli, the likely Republican nominee, opposed the bill but must now find a way to rally a splintered GOP and demoralized conservatives. At least Republicans can erase Mr. McDonnell’s name as a national candidate or VP choice in 2016.

I don’t lose a lot of sleep worrying about Republican political prospects, but I am irked that politicians are taking more of my money for their vote-buying schemes.

To add insult to injury, I’m not rich, so I don’t have the ability to directly benefit from tax competition by moving to a zero-income-tax state such as Florida or Texas.

And moving to Maryland or DC would be jumping out of the fiscal frying pan and into the tax fire, so that’s also not an option.

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Sigh. I feel like a modern-day Sisyphus. Except I’m not pushing a rock up a hill, only to then watch it roll back down.

Compared to educating journalists about fiscal policy, this is an easy task

I have a far more frustrating job. I have to read the same nonsense day after day about “deep spending cuts” even though I keep explaining to journalists that a sequester merely means that spending climbs by $2.4 trillion over the next 10 years rather than $2.5 trillion.

The latest example comes from the New York Times, which just reported about “deep automatic spending cuts that will strike hard” without bothering to provide a single concrete number about spending levels in any fiscal year.

Yes, you read correctly. A story about budget cuts did not have any numbers for spending in FY2013, FY2014, or any other fiscal year.

So, for the umpteenth time, here are the actual numbers from the Congressional Budget Office showing what will happen to spending over the next 10 years if we have a sequester.

Sequester 2013

I don’t mean to pick on the New York Times. Yes, the self-styled paper of record has been guilty in the past of turning budget increases into spending cuts, but the Washington Post is guilty of the same sin, having actually written in 2011 that reducing a $3.8 trillion budget by $6 billion would “slash spending.”

And the NYT story actually has some decent reporting on how Republicans so far have (fingers crossed) avoided the tax-increase trap that Obama thought the sequester would create.

But one would still like to think that Journalism 101 teaches reporters to include a few hard facts when writing stories. Particularly if they’re going to use dramatic adjectives to describe what supposedly will happen.

Anyhow, this is just part of a larger problem. As I explained in these John Stossel and Judge Napolitano interviews, the politicians and interest groups have given us a budget process that assumes ever-increasing spending levels, which then allows them to make hysterical claims about “savage” and “draconian” cuts whenever spending doesn’t rise as fast as some hypothetical baseline.

This is why almost nobody understands that it’s actually relatively simple to balance the budget with a modest bit of spending restraint. My goal is reducing the burden of government spending, not fiscal balance, but it’s worth noting that we’d have a balanced budget in just 10 years if spending grew by “only” 3.4 percent annually.

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This is an easy question and a hard question.

It’s an easy question because the obvious answer is to say “none-of-the-above.”

After all, voters in Italy have four horrible choices.

  1. Silvio Berlusconi, who is an Italian version of George W. Bush. He’ll occasionally dish out some good rhetoric and promise tax relief, but he’s shown zero desire to reduce the burden of government spending and intervention.
  2. Mario Monti, an apparatchik who is first and foremost a creature of the calcified bureaucracy in Brussels. He would be a sober hand on the helm, but seems content that the ship is heading in the wrong direction. He’s sort of the Mitt Romney of Italy.
  3. Beppe Grillo, a comedian/entertainer/blogger who has a populist (albeit incoherent) agenda. He’s a strange cross of Jesse Ventura, Arnold Schwarzenegger, Ross Perot, and Bernie Sanders, so don’t even think about that petri dish.
  4. Pier Luigi Bersani, a run-of-the-mill social democrat who started his political life in the Communist Party but now is best described as a career politician who wants to preserve the status quo of statism. Sort of the Harry Reid of Italy.

So far as I’m aware, there is no good political party in Italy. Classical liberals, conservatives, and libertarians seem to be endangered species. That’s why I answered none-of-the-above.

But what if my kids were being held hostage and I had to choose from this unpalatable quartet?

Go ahead and shoot them…no, just kidding. Let’s see, what should I do…?

Italian Election PollPart of me wants to cheer for a Bersani-Monti coalition government for the same reason that I wanted Hollande to win in France. When there’s no good alternative, let the above-board statists prevail so there’s hope of a backlash when things fall apart.

And if the polling data is accurate, that’s probably going to happen.

But part of me wants Grillo to do well just for the entertainment value. And maybe he would blow up the current system, which unquestionably has failed, though one wonders whether any system will work now that a majority of Italians are riding in the wagon of government dependency.

Indeed, it’s a bit of serendipity that a former Cato intern who came from Italy drew this famous set of cartoons about the rise and fall of the welfare state.

While I’m largely uncertain about what should happen in this election, let me close with a few thoughts on public policy in Italy. In particular, I want to disagree with some of my right-leaning friends who argue that the euro should be blamed for Italy’s woes.

I’m not a fan of the single currency, largely because it is part of the overall euro-federalist campaign to create a Brussels-based superstate.

That being said, the euro has been a good thing for Italy and other Club Med nations. As I explained last July, it means that countries such as Italy, Spain, and Greece can’t augment the damage of bad fiscal and regulatory policy with inflationary monetary policy.

In other words, it is good news that Italy can’t use inflation as a temporary narcotic to offset the pain caused by too much red tape and an excessive burden of government spending.

This doesn’t mean that politicians will ever choose the right approach of free markets and small government, but at least there’s a 2 percent chance of that happening if they stay with the euro. If Italy goes back to the lira, the odds of good reform drop to .00003 percent.

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I shared a couple of amusing sequester cartoons the other day, and I’ve previously written about the absurdity of anti-sequester hysteria in Washington when all it means is that the federal budget will grow by $2.4 trillion over the next 10 years rather than $2.5 trillion.

This Nate Beeler cartoon effectively captures the mindset of Washington’s big spenders.

sequester Cartoon Beeler

Let’s take a serious look at this topic.

George Will is appropriately disgusted by the antics of the political class. Here’s some of his column on the topic.

The sequester has forced liberals to clarify their conviction that whatever the government’s size is at any moment, it is the bare minimum necessary to forestall intolerable suffering. At his unintentionally hilarious hysteria session Tuesday, Obama said: The sequester’s “meat-cleaver approach” of “severe,” “arbitrary” and “brutal” cuts will “eviscerate” education, energy and medical research spending. “And already, the threat of these cuts has forced the Navy to delay an aircraft carrier that was supposed to deploy to the Persian Gulf.”

Will elaborates on the Navy’s shameful  stunt.

“Forced”? The Navy did indeed cite the sequester when delaying deployment of the USS Truman. …the Navy is saying it cannot find cuts to programs or deployments less essential than the Truman deployment. The Navy’s participation in the political campaign to pressure Congress into unraveling the sequester is crude, obvious and shameful, and it should earn the Navy’s budget especially skeptical scrutiny by Congress. The Defense Department’s civilian employment has grown 17 percent since 2002. In 2012, defense spending on civilian personnel was 21 percent higher than in 2002. And the Truman must stay in Norfolk? This is, strictly speaking, unbelievable.

Will also comments on the Keynesian economic theory being used to fight against sequestration.

Obama, who believes government spends money more constructively than do those who earn it, warns that the sequester’s budgetary nicks, amounting to one-half of 1 percent of gross domestic product, will derail the economy. A similar jeremiad was heard in 1943 when economist Paul Samuelson, whose Keynesian assumptions have trickled down to Obama, said postwar cuts in government would mean “the greatest period of unemployment and industrial dislocation which any economy has ever faced.” Federal spending did indeed shrink an enormous 40 percent in one year. And the economy boomed.

Amen. I’ve already cited a Cato study on this topic, which shows that the Keynesians were wildly wrong in their predictions of post-war economic collapse.

And the Wall Street Journal also has opined on this topic, showing not only that lawmakers wisely rejected another round of Keynesian foolishness, but also that post-war tax cuts were one of the reasons why the economy quickly rebounded.

Let’s close with some more mockery of the clowns in Washington.

This Gary Varvel cartoon shows what’s happening, though I’ve would have drawn Chicken Little to resemble Obama.

Sequester Cartoon Varvel

But what about the second frame of the cartoon? If the sequester happens, will the statists be forced to admit that they were creating false fears in hopes of protecting their spots at the federal trough?

As reported in the Washington Post, one of them is very worried about this possible outcome.

“…The bad news is, the world doesn’t end March 2,” said Emily Holubowich, a Washington health-care lobbyist who leads a coalition of 3,000 nonprofit groups fighting the cuts. “The worst-case scenario for us is the sequester hits and nothing bad really happens. And Republicans say: See, that wasn’t so bad.”

Since the sequester takes effect on March 1, we’ll soon find out.

Some bureaucracies will deliberately try to make the sequester as inconvenient and painful as possible for the American people. As I said in this Larry Kudlow interview, the heads of those agencies should be fired.

Of course, Obama will probably try to reward them, but those who favor responsible fiscal policy should do everything possible to expose the shameful game being played by these political hacks.

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I recently wrote about the pinheads at the Equal Employment Opportunity Commission, who are threatening legal action against companies that are leery about hiring people with criminal records.

Now some states and cities are making it illegal to discriminate against those that have been unemployed for a long period of time.

Unlike special legal status for ex-cons, this sounds reasonable. After all, we all would like to help the long-term unemployed break free of the chains of government dependency.

But sometimes good intentions generate undesirable effects. I explain in this Fox Business News debate that companies will do their best to avoid even interviewing the long-term unemployed if they have to worry about potential legal pitfalls whenever they make a hiring decision.

I also explain that businesses have no incentive to engage in unjustified discrimination. After all, that would imply a willingness to deliberately sacrifice profit in pursuit of some irrational bias.

But as Walter Williams has succinctly argued, some forms of discrimination make sense.

And if there are two applicants who otherwise seem to have equal qualifications for a certain job, but one has been out of work for more than 12 months, it’s only logical that the employer will think that a lengthy stint of sitting on a couch does not suggest great habits.

Which is why Obama’s policy of never-ending unemployment benefits is so misguided. People get lured into long-term unemployment and there is both anecdotal evidence (check out these stories from Michigan and Ohio) and empirical evidence (here, here, and here) showing this unfortunate impact.

Heck, even Paul Krugman and Larry Summers have admitted that you get more unemployment when you subsidize joblessness.

Ramirez Unemployment CartoonSo you won’t be surprised to know that I’ve dispensed some tough love on this topic as well.

P.S. This cartoon does a very effective job of showing the consequences of paying people not to work.

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What government spends the most on health care?

  • Is it Canada or the United Kingdom, which are famous (or, if these stories are any indication, infamous would be a better description) for single-payer healthcare systems?
  • Is it Sweden, the home of the cradle-to-grave welfare state?
  • Or France, the land of the world’s most statist people?
  • How about Italy or Greece, nations that have spent themselves into fiscal crisis?

Nope, nope, nope, and nope.

The United States spends more money, on a per-capita basis, than any of those countries. Here’s a chart from a Forbes analysis prepared by Doug Holtz-Eakin and Avik Roy.

Per Capita Government Healthcare Spending

There are three big reasons why there’s more government-financed healthcare spending in the United States.

1. Richer nations tend to spend more, regardless of how they structure their healthcare systems.

2. As you can see at the 1:18 mark of this video, the United States is halfway down the road to a single-payer system thanks to programs such as Medicare and Medicaid.

3. America’s pervasive government-created third-party payer system leads to high prices and costly inefficiency.

So what’s the moral of the story? Simple, notwithstanding the shallow rhetoric that dominates much of the debate, the United States does not have anything close to a free-market healthcare system.

That was true before Obamacare and it’s even more true now that Obamacare has been enacted.

Indeed, it’s quite likely that many nations with “guaranteed” health care actually have more market-oriented systems than the United States.

Avik Roy argues, for instance, that Switzerland’s system is the best in the world. And the chart above certainly shows less direct government spending.

And there’s also the example of Singapore, which also is a very rich nation that has far less government spending on healthcare than the United States.

If you read the Avik Roy articles linked above, and also this study by my Cato colleague Mike Tanner, you’ll see that there’s no perfect system.

Our challenge is that it’s very difficult to put toothpaste back in a tube. Thanks to government programs and backdoor intervention through the tax code, the United States healthcare system is nowhere close to a free market (with a few minor exceptions such as cosmetic surgery and – regardless of what you think of the procedure – abortion).

Yes, I think entitlement reform can make things better, though fixing Medicare and Medicaid should be seen as a necessary but not sufficient condition. As I show in this post, we would simply move a little bit in the right direction on the spectrum between markets and statism.

Tax reform could solve another part of the problem by removing the bias for over-insurance, which presumably would lead people to pay out of pocket and use insurance for large, unexpected costs.

Fundamental tax reform is also the best way to improve the healthcare system. Under current law, compensation in the form of fringe benefits such as health insurance is tax free. Not only is it deductible to employers and non-taxable to employees, it also isn’t hit by the payroll tax. This creates a huge incentive for gold-plated health insurance policies that cover routine costs and have very low deductibles. …Shifting to a flat tax means that all forms of employee compensation are taxed at the same low rate, a reform that presumably over time will encourage both employers and employees to migrate away from the inefficient over-use of insurance that characterizes the current system. For all intents and purposes, the health insurance market presumably would begin to resemble the vastly more efficient and consumer-friendly auto insurance and homeowner’s insurance markets.

In other words, as this poster suggests, government is the problem and less government is the solution.

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I’m not a fan of loopholes in the tax code.

I’ve complained about the number of pages in the tax code, the number of provisions in the tax code, and I’ve even groused about the rising number of pages in the instruction manual for the 1040 tax form.

And I’ve specifically come out against tax preferences for ethanol, housing, municipal bonds, charity, and state and local taxes.

But just as you don’t necessarily know whether someone is tall or short without knowing the average height of a population, you can’t automatically identify loopholes without first defining an ideal tax system. In other words, you need a benchmark (referred to as “the tax base” or “taxable income”) in order to measure what’s a loophole.

Unfortunately, that’s not an easy task because there are two competing visions of the ideal benchmark. I’ve addressed this issue previously, in this post on the “tax expenditure con job,” but let’s dig into the weeds a bit.

  1. Those on the left, including the Joint Committee on Taxation, use what is sometimes called the “Haig-Simons” definition of a tax base. Also known as the “comprehensive income tax base,” this system assumes that there should be double taxation of income that is saved and invested (as shown by this startling chart). Another way of saying this is that the Haig-Simons approach assumes the government should tax income plus changes in the value of assets. Moreover, the Haig-Simons system assumes “worldwide taxation” and that businesses can’t deduct investment costs as they occur.
  2. Those on the right, by contrast, support what is generally called “consumption-based” taxation. This doesn’t mean a tax collected at the cash register (though a national sales tax is an example of a tax with a “consumption base”). Instead, it simply refers to a system where income is taxed only one time. So, for example, a flat tax is a consumption-base tax since income is taxed only one time as it is earned, just as a national sales tax is a consumption-base tax since income is taxed only one time as it is spent. Moreover, a consumption-base system assumes “territorial taxation” and that business expenses should be deductible in the year the money changes hands.

While some features of the tax code – such as the healthcare exclusion – are loopholes according to both the Haig-Simons system and the consumption-base system, you get a divergence of opinion in key areas.

a) In a consumption-base world, there’s no double taxation and the capital gains tax therefore doesn’t exist. But from the perspective of the Haig-Simons tax base, the fact that capital gains are taxed at 23.8 percent instead of 39.6 percent is characterized as a loophole.

b) In a consumption-base world, there’s no double taxation and all savings gets the equivalent of IRA or 401(k) treatment. But from the perspective of Haig-Simons tax base, IRAs and 401(k)s are loopholes.

c) In a consumption-base world, there’s territorial taxation and no attempt to impose tax on income earned (and subject to tax) in other countries. But the Haig-Simons tax base assumes “worldwide taxation,” which means that “deferral” is a loophole rather than a way of mitigating a discriminatory penalty.

So why am I getting into boring details on this wonky issue? In part, because it helps people understand that tax reform is not just a matter of having a low tax rate. It’s also very important to define income correctly.

But I also think some background knowledge is necessary to explain why the White House is blowing smoke when they relentlessly demagogue against “corporate jets” as part of their never-ending campaign for class-warfare tax policy.

Let’s examine some excerpts from an ABC News report.

Listening to the White House, you’d think the key to averting the across-the-board spending cuts (the dreaded “sequester”) set to in place on March 1 is closing the tax break for owners of private jets. …Carney has brought up the corporate jet tax break at every single briefing this week. Listening to the White House, you might think that the “balanced” Democratic plan to avert the spending cuts would close that loophole for private jets. But you would be wrong. The Senate Democratic plan – which has been endorsed by the White House and is, in fact, the only Democratic plan actively under consideration right now – doesn’t touch corporate jets. …The tax break…allows the owners of private jets to depreciate their airplanes over five years instead of the standard seven years for commercial airplanes.

I don’t want you to focus on the demagoguery or the potential hypocrisy. Instead, consider the final sentence of the excerpt.

It turns out that the supposed “loophole” is really a penalty from a consumption-base perspective. If a company purchases a jet for $20 million, they should be able to deduct – or expense – that $20 million when calculating that year’s taxable income (after all, what is profit other than total revenue minus total costs?).

A sensible tax system defines profit as total revenue minus total costs – including purchases of private jets

But today’s screwy tax code forces them to wait five years before fully deducting the cost of the jet (a process known as depreciation). Given that money today has more value than money in the future, this is a penalty that creates a tax bias against investment (the tax code also requires depreciation for purchases of machines, structures, and other forms of investment).

Anyhow, because the tax bias imposes a five-year wait rather than a seven-year wait, the Obama White House would like us to believe that companies are getting some sort of egregious loophole.

Nonsense. In a good tax regime, companies should be able to deduct expenses in the year they are incurred. The fact that they have to wait five years is a penalty. But the White House wants us to perceive this penalty as a loophole or subsidy because it could be even more onerous.

By the way, if we’re worried about actual subsidies that benefit corporate jets, Tim Carney’s already explained that we should focus on the cronyists at the Export-Import Bank. And I heartily agree.

P.S. Defining the right “tax base” doesn’t imply anything about tax rates. You can have a so-called progressive rate structure or a single rate with either the Haig-Simons system or a consumption-base system.

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All statists want much bigger government, but not all of them are honest about how to finance a Greek-sized welfare state.

The President, for instance, wants us to believe that the rich are some sort of fiscal pinata, capable of generating endless amounts of tax revenue.

Using IRS tax data, I’ve shown that this is a very inaccurate assumption. And I’ve also used IRS data to show the President that there are big Laffer-Curve effects when you try to rape and pillage high-income Americans.

Heck, even the Europeans have realized that you can only squeeze so much blood from that stone.

Notwithstanding the misleading rhetoric from the Obama Administration, there are some honest folks on the left who understand and acknowledge that you can’t have bigger government unless you put ordinary people on the chopping block.

The New York Times seems really fixated on screwing Joe Lunchbucket. Here are some excerpts from an editorial in today’s paper.

…new taxes on high-income Americans are a matter of necessity and fairness; they are also a necessary precondition to what in time will have to be tax increases on the middle class. …As the economy strengthens and the population ages, more taxes will be needed from further down the income scale… But there will never be a consensus for more taxes from the middle class without imposing higher taxes on wealthy Americans, who have enjoyed low taxes for a long time.

What’s particularly interesting about this editorial is that the New York Times is very explicit about political strategy. They support more class-warfare taxes in order to set the stage for higher taxes on the middle class.

We can’t say we haven’t been warned.

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I’ve previously shared some very good “government-shutdown” jokes, and also two superb cartoons on that topic from the 1990s.

So I guess it was only a matter of time before we got some cartoons about sequestration.

But I don’t like most of them because they imply sequestration is a bad thing.

But this Lisa Benson cartoon is worth sharing if for no other reason that it calls attention to the fact that people are myopically fixating on a very small sequester while ignoring a giant long-run entitlement problem.

Sequester Cartoon Benson

The good news, for what it’s worth, is that the House of Representatives voted for good entitlement reform in 2011 and 2012. So it’s theoretically possible that we may deal with that meteor before it causes a Greek-style meltdown at some point in the future.

I also like this next cartoon, produced by Jerry Holbert, because it shows Uncle Sam as a big fat slob.

The obvious implication is that government is too big and needs to be put on a diet, with is the same theme we get with this cartoon about redistribution, this cartoon about the VAT., and these cartoons about Obama’s agenda.

Sequester Cartoon Holbert

The problem, of course, is that the sequester is too small. But at least this cartoon suggests that the problem is too much government spending and that Uncle Sam needs to lose some weight.

Enjoy, and please share widely.

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Notwithstanding hysterical rhetoric from the White House, the bureaucracies, and the various pro-spending lobbies in Washington, the sequester does not mean “vicious” or “draconian” spending cuts.

I wish that was the case.

All it does is restrain spending so that it grows by $2.4 trillion over the next 10 years rather than $2.5 trillion. We need a much greater degree of fiscal discipline to address the long-term spending crisis – including some real entitlement reform.

But the sequester is certainly better than doing nothing.

My concern, though, is that feckless and incompetent Republicans will fumble away victory. I explain in this Larry Kudlow interview that “doing nothing” is the right approach since the sequester happens automatically, but I’m worried that this very modest step in the right direction will be eroded as part of subsequent spending bills.

On a related note, Byron York of the Washington Examiner is rather perplexed by the GOP’s sequester strategy, which is based on the inconsistent message that it should happen, but that it’s bad.

Boehner calls the cuts “deep,” when most conservatives emphasize that for the next year they amount to about $85 billion out of a $3,600 billion budget.  Which leads to another question: Why would Boehner adopt the Democratic description of the cuts as “deep” when they would touch such a relatively small part of federal spending? The effect of Boehner’s argument is to make Obama seem reasonable in comparison. After all, the president certainly agrees with Boehner that the sequester cuts threaten national security and jobs.  The difference is that Obama wants to avoid them.  At the same time, Boehner is contributing to Republican confusion on the question of whether the cuts are in fact “deep” or whether they are relatively minor. Could the GOP message on the sequester be any more self-defeating?

My two cents is that fiscal conservatives should argue that sequestration isn’t the ideal way to trim the burden of government spending, but that it’s the only option since President Obama is refusing to look at any alternatives unless they are based on class-warfare tax hikes and phony entitlement gimmicks.

What really matters, though, is in the driver’s seat in this battle. They can win…but only if they want to.

Every so often, I issue imperious edicts about things that Republicans should do to demonstrate that they genuinely support limited government.

  1. No tax increases, since more money for Washington will encourage a bigger burden of government and undermine prosperity.
  2. To stop bailouts for Europe’s decrepit welfare states, no more money for the International Monetary Fund.
  3. Reform the biased number-crunching methodology at the Congressional Budget Office and Joint Committee on Taxation.
  4. No more money from American taxpayers to subsidize the left-wing bureaucrats at the Paris-based Organization for Economic Cooperation and Development.
  5. Defund the crony capitalists at the Export-Import Bank.

I’m not naive enough to think that GOPers actually care about my demands, but I certainly think the sequester is a “gut-check” moment for Republicans.

If they capitulate to Obama in the short run, or if they wipe out the sequester savings as part of subsequent spending bills, that will be a very dismal sign that the folks who came to DC thinking it was a cesspool have instead decided that it’s really a hot tub.

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I’m a proponent of a pro-growth and non-corrupt tax code.

I mostly write and talk about the flat tax, though I’d be happy to instead accept a national sales tax if we could somehow get rid of the 16th Amendment and replace it with something so ironclad that even Justices such as John Roberts and Ruth Bader Ginsburg couldn’t rationalize that the income tax was constitutional.

But since there’s no chance of any good tax reform with Obama in the White House, there’s no need to squabble over the best plan. Instead, our short-term goal should be to educate voters so that we create a more favorable intellectual climate for genuine reform in 2017 and beyond.

That’s why I’ve argued in favor of lower tax rates and shared the latest academic research showing that tax policy has a significant impact on economic performance.

But tax reform also means getting rid of the rat’s nest of deductions, credits, exemptions, preferences, exclusions, shelters, loopholes, and other distortions in the tax code.

Why? Because people should make decisions on how to earn income and how to spend income on the basis of what makes economic sense, not because they’re being bribed or penalized by the tax code. That’s just central planning through the back door.

And if you don’t think this is a problem, I invite you to peruse three startling images, each of which measures rising complexity over time.

  1. The number of pages in the tax code.
  2. The number of special tax breaks.
  3. The number of pages in the 1040 instruction booklet.

Today’s Byzantine system is good for tax lawyers, accountants, and bureaucrats, but it’s bad news for America. We need to wipe the slate clean and get rid of this corrupt mess.

But as I explain in this appearance on Fox Business News, we won’t make progress until we control the burden of government spending and unless we make sure that deductions are eliminated only if we use every penny of revenue to lower tax rates.

I’ve previously explained why it’s okay to get rid of itemized deductions for mortgage interest, charitable contributions, and state and local tax payments.

Let’s now take a moment to explain why the internal revenue code shouldn’t be artificially steering capital toward state and local governments at the expense of private investment.

Under current law, there’s no federal income tax imposed on interest from municipal bonds. No matter how rich you are, Uncle Sam doesn’t tax a penny of the interest you receive if you use your wealth to lend money to state and local governments.

Should the tax code steer money to Detroit politicians?

This “muni-bond exemption” has two unfortunate effects.

  • It makes it easier and cheaper for state and local governments to incur debt, thus encouraging more wasteful spending by cities such as Detroit and states such as California.
  • By making the debt of state and local governments more attractive than private business investment, the loophole undermines long-term growth by diverting capital to unproductive uses.

The politicians at the state and local level certainly understand what’s at stake. They’re lobbying to preserve this destructive tax break. Here are some excerpts from a story in the New York Times.

Mr. Firestine [of Montgomery County, MD] is on the front lines of a lobbying campaign by local and state governments, bond dealers, insurers and underwriters that is trying to pre-empt any attempt to limit or even kill the tax exemption. …At present, the federal government forgoes about $32 billion a year in taxes by exempting the interest that investors earn from municipal bonds. …The National Commission on Fiscal Responsibility and Reform, known as the Simpson-Bowles commission, has suggested taxing all municipal bond interest, not just the interest paid to people in the top bracket. …Officials of some other government groups, like the New York City Housing Development Corporation, have formed a coalition with Wall Street groups like the Bond Dealers of America to lobby on the issue. But there is the sense of an uphill battle. …Capping the tax exemption would cause high-bracket taxpayers to look for higher-yielding investments, he said, and the county would have to offer more interest to lure them back.

Based on the last sentence in the excerpt, I gather we’re supposed to think it would be bad news if we got rid of this tax preference and taxpayers shifted more of their money to private-sector investments.

Needless to say, that’s misguided. Only in the upside-down world of Washington do people think it is smart to create tax preferences that lead to more wasteful spending by state and local governments, while simultaneously imposing punitive forms of double taxation on saving and investment in the private sector.

By the way, this shouldn’t be an ideological issue. If this amazing chart is any indication, leftists who want workers to enjoy more income should be clamoring the loudest for a tax system that doesn’t tilt the playing field against capital formation.

P.S. While simplicity is a good goal for tax policy, you will understand why it shouldn’t be the only goal if you check out this potential Barack Obama tax reform plan.

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I’ve shared some very interesting commentary and opinions on the Drug War from folks such as John Stossel, Mona Charen, Gary Johnson, Pat Robertson, Cory Booker, and Richard Branson.

And I’ve shared some horror stories about “asset forfeiture,” an odious procedure that allows the government to steal private property without any finding of guilt.

But sometimes an anecdote is the best way of exposing the silliness of the War on Drugs.

Here are some surreal tidbits from a Yahoo Sports report.

Bonnie Jonas-Boggioni, 65, and her husband were driving home to Plano, Texas from Columbus after attending her mother-in-law’s funeral when a pair of black police SUV’s stopped the couple a few miles outside of Memphis. “Knowing I wasn’t speeding, I couldn’t imagine why,” Jonas-Boggioni told the Columbus Dispatch. “They were very serious. They had the body armor and the guns.”

What was the supposed “probable cause” that led the police to make this stop? Ummm…..

On the back of Jonas-Boggioni’s car was a Buckeye leaf decal, similar to the one players’ have on their helmets, and cops mistakenly thought it was marijuana leaf. Yes, really. “What are you doing with a marijuana sticker on your bumper?” one of the cops asked Jonas-Boggioni. After trying to explain that the sticker was not a marijuana leaf and that she and her husband were not trafficking drugs cross-country, the police advised Jonas-Boggioni to remove the sticker as to not cause any more confusion.

As a fan of SEC football, I certainly agree that there’s something wrong with supporting the Ohio State Buckeyes. But bad judgement shouldn’t be against the law, much less a cause for a legal encounter with the government.

Particularly when the cops are showing their lack of knowledge.

Tennessee police apparently aren’t botany experts. If they were, they’d know a marijuana leaf has seven leaflets (see above picture) and a narrow shape as compared to the Buckeye leaf, which is fat and has five leaflets. …As for Jonas-Boggioni, she acknowledged the cop’s wishes, but got back in her car without removing the sticker. “I didn’t take it off,” Jonas-Boggioni told the paper. “This little old lady is no drug dealer.”

But that doesn’t mean other little old ladies aren’t drug dealers.

Click here is you want to read about a grandmother’s encounter with the Drug War.

Now ask yourself why we should be paying higher taxes to support this failed effort.

And remember that you can do something about it, as shown by some good people in Montana.

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As part of my US v UK government stupidity contest, I’ve shared some really bizarre examples of anti-gun/anti-self defense political correctness.

At first I thought the Brits were more brainless.

Though, to be sure, there’s lots of foolishness in America.

The Brits were in the lead because they actually arrested people who did done nothing wrong.

But now the United States may deserve this booby prize. Here are some details of a Kafkaesque story from RT.

School administrators in Virginia suspended a 10-year-old boy earlier this month after he was caught with an orange-tipped toy gun in his backpack. Now as he awaits his next meeting with his probation officer, his mother opens up about the incident. …she is still in disbelief over what the entire event has done for her son, herself and the community.

But he wasn’t just suspended. He then got arrested.

Just one day after her fifth-grader’s toy gun was discovered on a school bus leaving Douglas MacArthur Elementary School in Alexandria, Virginia, his mom says he was arrested, dragged to court and questioned, photographed and fingerprinted. “Any time we get a call like this, we take it very seriously until we can determine the extent of the weapon, if it’s real or not, and what the student intends to do with it,” Alexandria Police Department spokesman Jody Donaldson told the Washington Examiner after the boy’s arrest.

Now that the bureaucrats are getting laughed at, they’re beginning to say the whole episode may have been a mistake. Gee, you think?!?

Today, though, Donaldson admits that things may have been a bit different had the authorities taken a breath before they rushed to respond. “If we were able to investigate right away, the outcome might have been different,” she tells the Post. Ms. Gilbert agrees and thinks authorities acted a little too overzealously. Even the mother who first reported the gun that her daughter saw on an Alexandria school bus tells the paper, “It’s such a bad handling of the situation, it was ridiculous.”

But this isn’t a laughing matter. The little boy’s life has been turned upside down.

…the boy has been forced to switch schools and has been entangled in a legal nightmare surely to serve as a thorn in the side of his family for years to come. That, of course, isn’t even taking into consideration what sort of effect the entire incident will have on the boy, who now has a record with local authorities.

It’s quite embarrassing that this happened in my state of Virginia.

You’d expect this kind of vapid political correctness in New York, not in the south.

But the infectious disease of bureaucratic brainlessness is spreading all over Dixie.

Here are some excerpts from a story about some first-rate government stupidity that recently was on display in Alabama.

A high school student in Florence said he has been suspended because of a picture of a gun. Daniel McClaine Jr., a freshman at Poston Butte High School, said he saved the picture as his desktop background on his school-issued computer. A teacher noticed it and turned him in. …the district policy states students are prohibited from “sending or displaying offensive messages or pictures,” and cannot access, send, create or forward pictures that are considered “harassing, threatening, or illegal.”McClaine said he read the guidelines but does not consider the picture threatening to anyone. …Daniel’s father said after ABC15 contacted the school, the administration backed down and will let his son return to school on Monday instead of Wednesday.

The good news, so to speak is that Daniel wasn’t arrested and the school’s bureaucrats backed down and canceled the suspension.

But it’s hard to be optimistic about the education system after reading this type of story.

If bureaucrats don’t have common sense, how can they teach reading, writing, and arithmetic?

Maybe the bigger lesson (especially given the shocking lack of results after record levels of staffing and funding) is that we should break up the government school monopoly and let parents choose better-quality schools?

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As you can see here and here, I’m a huge fan of Ronald Reagan.

But it’s not just that the Gipper had good rhetoric. He also did a decent job of restraining spending and he significantly lowered marginal tax rates.

Combined with other pro-market reforms and his stalwart willingness to rein in inflation, as well as the fact that his policies led to the collapse of the evil Soviet Empire, I don’t think it’s an exaggeration that Reagan saved America.

That being said, he may not be the greatest president of the 20th century.

I’ve already shared a famous Calvin Coolidge video to show he said the right things. But, even more important, he did the right things.

Here’s some of what Amity Shlaes wrote about Coolidge for today’s Wall Street Journal.

…while Reagan inspired and cut taxes, he did not reduce the deficit. He did not even cut the budget. But if you look back, past Dwight Eisenhower and around the curve of history, you can find a Republican who did all those things: Calvin Coolidge. …The 30th president cut the top income-tax rate to 25% (lower than the 28% of the historic Reagan cut of 1986). Coolidge reduced the national debt and balanced the budget. When he departed the White House for his home in Northampton, Mass., he left a federal budget smaller than the one he found. …”I am for economy, and after that I am for more economy,” Coolidge told voters… The jovial Harding had vetoed only six bills. Coolidge vetoed 50. “It is much more important to kill bad bills than to pass good ones,” Coolidge once advised his father.

That last sentence should be repeated as often as possible. Indeed, it’s the reason why I mocked USA Today for calling Congress unproductive.

Since I’m guessing more than 90 percent of legislation undermines our liberty, we’re far better off when lawmakers do nothing.

Anyhow, you won’t be surprised to learn that the Gipper appreciated Coolidge.

President Reagan recognized Coolidge’s achievement, and upon taking office in 1981 he had a neglected Coolidge picture restored to a place of honor near Lincoln and Jefferson in the Cabinet Room.

And if you want to see some evidence of Coolidge’s superb economic stewardship, here’s a look at what happened with both economic output and the burden of government spending.

Coolidge Record

One final point. Just like Reagan was far from perfect, the same is true of Coolidge. I’ve never studied the economics of the 1920s, but it seems likely that some of the policies of that decade (perhaps excess credit expansion by the Federal Reserve?) helped set the stage for an economic downturn.

Though it’s also clear that the statist policies of Hoover and Roosevelt turned the downturn into a Great Depression.

Bush and Obama are sort of the modern version of Hoover and Roosevelt, though fortunately not nearly as bad.

Obama, for instance, raised the top tax rate from 35 percent to 39.6 percent as part of his class-warfare agenda. Hoover, by contrast, boosted the top rate from 25 percent to 63 percent and FDR then pushed it to 77 percent.

P.S. I already gave Amity’s new book on Coolidge a plug as part of my post about the flat tax-sales tax debate at Hillsdale. But in case you didn’t get the hint, here’s where you can order it.

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What’s the revenue-maximizing tax rate?

Since I’m interested in the growth-maximizing tax rate instead, I don’t think that’s even a legitimate question.

That being said, it seems like everyone – both on the left and on the right – should agree that it makes no sense to set tax rates so high that the government loses revenue.

That implies, after all, that the tax system is so punitive that the revenue-raising impact of the higher tax rate is more than offset by the revenue-losing impact of lower taxable income.

But if you ask five economists to identify the revenue-maximizing point, you’ll probably get nine answers.

But one thing we can say for sure is that the revenue-maximizing tax rate on Manny Pacquiao is less than 39.6 percent.

Here are some details from Yahoo Sports.

Manny Pacquiao’s chief adviser insisted Monday that the Filipino superstar’s preference is for his next bout – a fifth fight against Juan Manuel Marquez – to take place away from Las Vegas, with the off-shore Chinese gambling resort of Macau emerging as the “favorite.” The Dec. 8 fight between Manny Pacquiao and Juan Manuel Marquez was held at the MGM Grand in Las Vegas. (AP)Michael Koncz told Yahoo! Sports that the 39.6 percent tax rate Pacquiao would face if he were to fight again in the U.S. makes a fall bout in Las Vegas “a no go.” Promoter Bob Arum…said Pacquiao would not have to pay taxes if the fight takes place in casinos in either Singapore or Macau. “Manny can go back to Las Vegas and make $25 million, but how much of it will he end up with – $15 million?” Arum said. “If he goes to Macau, perhaps his purse will only be $20 million, but he will get to keep it all, so he will be better off.”

This is just an isolated example, to be sure, but I’ve already shared IRS data confirming that the rich have tremendous control over the timing, level, and composition of their income.

And just as is the case with athletes like Pacquiao (and soccer players), wealthy investors and entrepreneurs also have the ability to take advantage of tax competition by shifting economic activity to jurisdictions with better tax policy.

Indeed, these are some of the reasons why upper-income taxpayers wound up paying more money to the IRS after Reagan cut the top tax rate from 70 percent to 28 percent.

Sadly, Barack Obama seems to have a hard time grasping the relationship between tax rates, taxable income, and tax revenue – even though I prepared a simple lesson to help him understand the that there’s not a simplistic linear relationship.

So maybe this short video will help him understand the basic concept of the Laffer Curve.

Then again, maybe the President understands, but just doesn’t care. He’s already stated, after all, that he favors more punitive tax policies even if the government doesn’t collect any extra revenue.

P.S. Just in case you’re not convinced by some IRS data and the experiences of a boxer, there is lots of empirical evidence for the Laffer Curve.

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I did a video several years ago on the link between big government and big corruption, and I periodically revisit the issue by citing disgusting examples of sleaze and cronyism ranging from the Export-Import Bank to the racial spoils scam in Alaska.

The folks at Learn Liberty also have a great video on this topic, explaining how big government creates all sorts of unfair and corrupt advantages for politically connected large corporations.

Amen. Whether we’re talking about TARP bailouts, our loophole-ridden 72,000-page tax code, Obamacare favoritism, or green-energy scams, it seems like the federal government is a giant favor factory.

So why, then, are some people in favor of big government. Is it naiveté or are they part of the racket?

In any event, I highly recommend some other Learn Liberty videos.

I especially like the last video since it echoes many of the points I made in my video series on the economics of fiscal policy.

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While I generally have a happy-go-lucky attitude toward life, I’m pessimistic about public policy.

So when I got an email asking me how I would reconcile the supposed superiority of libertarian principles with the absence of libertarian societies, I initially was tempted to assert that our principles are sound and then give reasons why I nonetheless expect freedom to continuously diminish.

There are probably other reasons, but I think you get the idea. No wonder I’ve been speculating about where people should move when America descends into Greek-style economic chaos.

But I want to be uncharacteristically optimistic and explain why libertarian principles are still very relevant and that the outlook is better than we think.

So while I don’t expect that there will ever be a libertarian Nirvana, I also don’t think it’s time to throw in the towel and meekly accept the yoke of statism.

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Writing for the New York Times, Paul Krugman has a new column promoting more government spending and additional government regulation. That’s a dog-bites-man revelation and hardly noteworthy, of course, but in this case he takes a swipe at the Cato Institute.

The financial crisis of 2008 and its painful aftermath…were a huge slap in the face for free-market fundamentalists. …analysts at right-wing think tanks like…the Cato Institute…insisted that deregulated financial markets were doing just fine, and dismissed warnings about a housing bubble as liberal whining. Then the nonexistent bubble burst, and the financial system proved dangerously fragile; only huge government bailouts prevented a total collapse.

Upon reading this, my first reaction was a perverse form of admiration. After all, Krugman explicitly advocated for a housing bubble back in 2002, so it takes a lot of chutzpah to attack other people for the consequences of that bubble.

He likes cats, so he’s not all bad

But let’s set that aside and examine the accusation that folks at Cato had a Pollyanna view of monetary and regulatory policy. In other words, did Cato think that “deregulated markets were doing just fine”?

Hardly. If Krugman had bothered to spend even five minutes perusing the Cato website, he would have found hundreds of items by scholars such as Steve Hanke, Gerald O’Driscoll, Bert Ely, and others about misguided government regulatory and monetary policy. He could have perused the remarks of speakers at Cato’s annual monetary conferences. He could have looked at issues of the Cato Journal. Or our biennial Handbooks on Policy.

The tiniest bit of due diligence would have revealed that Cato was not a fan of Federal Reserve policy and we did not think that financial markets were deregulated. Indeed, Cato scholars last decade were relentlessly critical of monetary policy, Fannie Mae, Freddie Mac, Community Reinvestment Act, and other forms of government intervention.

Heck, I imagine that Krugman would have accused Cato of relentless and foolish pessimism had he reviewed our work  in 2006 or 2007.

I will confess that Cato people didn’t predict when the bubble would peak and when it would burst. If we had that type of knowledge, we’d all be billionaires. But since Krugman is still generating income by writing columns and doing appearances, I think it’s safe to assume that he didn’t have any special ability to time the market either.

Krugman also implies that Cato is guilty of historical revisionism.

…many on the right have chosen to rewrite history. Back then, they thought things were great, and their only complaint was that the government was getting in the way of even more mortgage lending; now they claim that government policies, somehow dictated by liberals even though the G.O.P. controlled both Congress and the White House, were promoting excessive borrowing and causing all the problems.

I’ve already pointed out that Cato was critical of government intervention before and during the bubble, so we obviously did not want government tilting the playing field in favor of home mortgages.

It’s also worth nothing that Cato has been dogmatically in favor of tax reform that would eliminate preferences for owner-occupied housing. That was our position 20 years ago. That was our position 10 years ago. And it’s our position today.

I also can’t help but comment on Krugman’s assertion that GOP control of government last decade somehow was inconsistent with statist government policy. One obvious example would be the 2004 Bush Administration regulations that dramatically boosted the affordable lending requirements for Fannie Mae and Freddie Mac, which surely played a role in driving the orgy of subprime lending.

And that’s just the tip of the iceberg. The burden of government spending almost doubled during the Bush years, the federal government accumulated more power, and the regulatory state expanded. No wonder economic freedom contracted under Bush after expanding under Clinton.

But I’m digressing. Let’s return to Krugman’s screed. He doesn’t single out Cato, but presumably he has us in mind when he criticizes those who reject Keynesian stimulus theory.

…right-wing economic analysts insisted that deficit spending would destroy jobs, because government borrowing would divert funds that would otherwise have gone into business investment, and also insisted that this borrowing would send interest rates soaring. The right thing, they claimed, was to balance the budget, even in a depressed economy.

Actually, I hope he’s not thinking about us. We argue for a smaller burden of government spending, not a balanced budget. And we haven’t made any assertions about higher interest rates. We instead point out that excessive government spending undermines growth by undermining incentives for productive behavior and misallocating labor and capital.

But we are critics of Keynesianism for reasons I explain in this video. And if you look at current economic performance, it’s certainly difficult to make the argument that Obama’s so-called stimulus was a success.

ZombieBut Krugman will argue that the government should have squandered even more money. Heck, he even asserted that the 9-11 attacks were a form of stimulus and has argued that it would be pro-growth if we faced the threat of an alien invasion.

In closing, I will agree with Krugman that there’s too much “zombie” economics in Washington. But I’ll let readers decide who’s guilty of mindlessly staggering in the wrong direction.

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As an economist with a boring personality (sorry to be redundant), I sometimes focus on numbers. And when contemplating the cost of regulation and red tape, there are some numbers that should frighten all of us.

But normal people are probably more likely to understand the cost of red tape when you share specific examples of absurd regulation.

Hooters GirlsAnd apparently that’s why we have an Equal Employment Opportunity Commission. The EEOC bureaucracy has become famous for ridiculous examples of red tape. It first became famous many years ago when it went after Hooters for hiring attractive young women instead of fat old men to serve as waitresses (and now the bureaucrats are going after a business in Rhode Island for the same reason).

In more recent years, the pinheads at the EEOC have harassed a trucking company for the supposed crime of discriminating against alcoholics and pushed multi-billion dollar regulations to accommodate “pee-shy” employees.

Now the clowns from the EEOC have jumped to the aid of a new “protected class.” Who are these unfortunate and mistreated people that the bureaucrats want to defend?

Get ready to pick your jaw off the floor. Jim Bovard has a column in the Wall Street Journal that seems like satire from The Onion.

Should it be a federal crime for businesses to refuse to hire ex-convicts? Yes, according to the Equal Employment Opportunity Commission, which recently released 20,000 convoluted words of regulatory “guidance” to direct businesses to hire more felons and other ex-offenders.

I’m sure employment lawyers are delighted at the thought of all the billable hours that will be required to peruse 20,000 words of bureaucratese, but what on earth is the EEOC thinking?

Well, it seems the bureaucrats have a long track record of seeking to “protect” the criminals amongst us.

…the EEOC began stretching Title VII of the 1964 Civil Rights Act to sue businesses for practically any hiring practice that adversely affected minorities. In 1989, the agency sued Carolina Freight Carrier Corp. of Hollywood, Fla., for refusing to hire as a truck driver a Hispanic man who had multiple arrests and had served 18 months in prison for larceny. The EEOC argued that the only legitimate qualification for the job was the ability to operate a tractor trailer. U.S. District Judge Jose Alejandro Gonzalez Jr., in ruling against the agency, said: “EEOC’s position that minorities should be held to lower standards is an insult to millions of honest Hispanics. Obviously a rule refusing honest employment to convicted applicants is going to have a disparate impact upon thieves.”

But even though the bureaucrats were slapped down by the courts, the EEOC continues to harass companies that seek to hire honest workers who aren’t a threat to the general public.

…the EEOC guidance frowns on such checks and creates new legal tripwires that could spark federal lawsuits. …If a background check discloses a criminal offense, the EEOC expects a company to do an intricate “individualized assessment” that will somehow prove that it has a “business necessity” not to hire the ex-offender (or that his offense disqualifies him for a specific job). …It is difficult to overstate the EEOC’s zealotry on this issue. The agency is demanding that one of Mr. Livingston’s clients—the Freeman Companies, a convention and corporate events planner—pay compensation to rejected job applicants who lied about their criminal records.

To understand the stupidity and venality of government, re-read the last sentence of that excerpt. The EEOC actually wants a business to give money to applicants who were rejected because they lied about their criminal records.

I’m at a loss for words.

Actually, just joking. I have a lot more words to write, particularly when I see that the bureaucrats at the EEOC also launched a legal attack against a firm that understandably didn’t want to hire crooks for sensitive jobs such as guarding nuclear power plants.

…businesses complying with state or local laws that require employee background checks can still be targeted for EEOC lawsuits. This is a key issue in a case the EEOC commenced in 2010 against G4S Secure Solutions after the company refused to hire a twice-convicted Pennsylvania thief as a security guard. G4S provides guards for nuclear power plants, chemical plants, government buildings and other sensitive sites, and it is prohibited by state law from hiring people with felony convictions as security officers. …The EEOC’s new regime leaves businesses in a Catch-22. As Todd McCracken of the National Small Business Association recently warned: “State and federal courts will allow potentially devastating tort lawsuits against businesses that hire felons who commit crimes at the workplace or in customers’ homes. Yet the EEOC is threatening to launch lawsuits if they do not hire those same felons.”

Oh, by the way, you probably won’t be surprised to learn that the EEOC refuses to say whether it conducts background checks on its own employees. Remember, the ruling class shouldn’t have to worry about all the laws imposed on you and me and the rest of the peasants.

…the EEOC is practically rewriting the law to add “criminal offender” to the list of protected groups under civil-rights statutes, [but] the agency refuses to disclose whether it uses criminal background checks for its own hiring. When EEOC Assistant Legal Counsel Carol Miaskoff was challenged on this point in a recent federal case in Maryland, the agency insisted that revealing its hiring policies would violate the “governmental deliberative process privilege.”

What’s particularly tragic about this farce is that it will almost certainly hurt the minorities that the EEOC supposedly is trying to help.

…studies published in the University of Chicago Legal Forum and the Journal of Law and Economics have found that businesses are much less likely to hire minority applicants when background checks are banned. As the majority of black and Hispanic job applicants have clean legal records, the new EEOC mandate may harm the very groups it purports to help.

Remarkable…and typical.

And if you want a few more examples of government stupidity:

Simply stated, government is a disaster waiting to happen – just as shown in this satirical poster.

P.S. If you didn’t get suicidally depressed after reading this post, Jim Bovard has a column about the Department of Housing and Urban Development that is equally mind-boggling.

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I haven’t shared any of the anti-politician jokes from the late-night talk shows since last year, so time for a new batch.

Jay Leno

  • President Obama wants Congress to increase the minimum wage. Believe me, when it comes to doing the minimum for their wage, Congress knows what it’s talking about.
  • Earlier tonight President Obama gave his State of the Union address. At every State of the Union address the president is introduced by some guy who walks in and says, “Mr. Speaker, the president of the United States!” If we’re really serious about reducing the size of government, start with that guy. What does he work, one day a year?
  • This is a real break with tradition. When the president walked into the chamber, instead of “Hail to the Chief,” they played “Hey, Big Spender.”
  • According to a leaked report from an upcoming U.N. study on climate change, solar activity may play a greater role in global warming than previously thought. The sun may be involved in global warming. It’s always the last place you’d think, isn’t it?
  • Several states are now looking into the possibility of taxing marijuana as a source of revenue. That is so typical of the government, isn’t it? Trying to squeeze blood from a stoner.
  • Monopoly is getting a big makeover. They want to make the Monopoly game more modern and bring it up to date to reflect our current culture. Like, in the new version of Monopoly, the banker never goes to jail.
  • A new study says that working fewer hours can slow global warming. So you know what that means? President Obama’s economic policy is also his climate change policy.
  • This is kind of disturbing. The Justice Department has concluded that the president can order drone strikes on American citizens. And today, Rush Limbaugh came out in favor of Obamacare.
  • Some Democrats in Congress are now trying to change the marijuana laws, making it legal so it can be taxed and increase revenue. Is that what the government’s come down to now? We’re selling drugs to pay off our debts? When did Uncle Sam become Scarface?
  • According to a new traffic study, it takes longer to get to work in Washington, D.C., than any other city in the country. On the other hand, they don’t do any work once they get there, so it’s pretty much a wash.
  • Zimbabwe’s finance minister revealed yesterday that his country has only $217 left in the government Treasury. Today President Obama said, “Stop bragging!”
  • The Senate has overwhelmingly approved John Kerry as the next secretary of state. In his farewell speech today to the Senate, Kerry spoke for 51 minutes. So, apparently he does believe in torture.
  • John Kerry is the first white male to hold that job since 1997. So finally middle-aged white guys with gray hair are breaking through the glass ceiling.
  • The Boy Scouts of America is now considering an end to its longstanding policy of banning gay scouts. How about that? And the girl scouts have a new policy during cookie season. It’s called “Don’t ask, just sell.”
  • According to reports from a journal called Psychological Science, people eat more junk food and gain weight during tough economic times. How ironic is that? The biggest obstacle to Michelle Obama’s war on obesity is President Obama’s economic policy.
  • Happy birthday to first lady Michelle Obama. She turned 49 years old today. She told a reporter she’d like a nice gift from Barack, but nothing extravagant. Oh, don’t worry. Obama is very responsible when he’s spending his own money.
  • President Obama said this week that he wants to find a “pathway for citizenship” for immigrants in the United States. Don’t we have that? It’s called the Rio Grande river.
  • Today Democrats said they want another trillion dollars in taxes. Didn’t we just give them $620 billion last Wednesday? Is that gone already? Who is running this, “The Real Housewives of Beverly Hills”?

David Letterman

  • I have to hand it to President Obama. He is full of confidence, really kind of cocky and full of himself. At the end of his State of the Union address he showed America his Kenyan birth certificate.
  • In the last two months Fox News has fired Sarah Palin, former governor of Alaska, and Dick Morris, well-known political pundit. Well, great. Two more jobs lost under Obama.

Conan

  • The Republican response to President Obama’s State of the Union address was given by Senator Marco Rubio. It’s just one more example of rich white guys getting a Hispanic to do a job they don’t want to do.
  • President Obama gave his State of the Union address tonight. The rebuttal will be given by Marco Rubio. Or as he’s known in the Republican Party, “our black guy.”
  • This is crazy. The justice department is saying that President Obama can order drone strikes on American citizens, that he can do that. In a related story, this is the last Obama joke I’m ever doing on this show.
  • Next year’s Super Bowl is already in the news. It takes place in New Jersey. The NFL says it wants to prevent another blackout. This one involves keeping Chris Christie away from his microwave.

Craig Ferguson

  • Mardi Gras is French for “Fat Tuesday.” Unfortunately, we’re all so politically correct now, Fat Tuesday is now officially known as “Big-Boned Day After Monday.”
  • The first episode of this spy show was great. Their mission was to fake a drivers license for a young socialist Kenyan boy living in Hawaii.

Jimmy Kimmel

  • An economist is suggesting that the U.S. Treasury mint a trillion-dollar coin and deposit it in the federal reserve — which is how “The Lord of the Rings” starts, isn’t it?

Jimmy Fallon

  • President Obama also gave House Speaker John Boehner a thumbs-up before the start of his State of the Union address. Or as Boehner put it, “Beats the finger I usually get!”
  • Do you know why the White House scheduled the State of the Union address for Lincoln’s birthday instead of Washington’s birthday? Well, it’s because Washington was famous for saying, “I cannot tell a lie.”
  • House Minority Leader Nancy Pelosi said on Fox News Sunday that it’s a false argument to say that we have a spending problem. You know something? I think she may be right. I think what we actually have is a “You don’t have a clue” problem.
  • It was just revealed that the Federal Reserve was hacked on Sunday. It’s pretty serious. In fact, they say the hackers could’ve made off with as much as negative $14 trillion.
  • Pakistan is opening an amusement park and a zoo in the same town where the raid on Osama Bin Laden took place. The zoo is pretty cool, but I’ve heard you won’t be able to see the seals until it’s too late.
  • “60 Minutes” anchor Steve Kroft is defending Sunday’s interview with President Obama and Hillary Clinton, saying that he didn’t have enough time to ask hard-hitting questions. That would be easier to believe if the name of his show wasn’t the amount of time he had.
  • The president will push for a path to citizenship for 11 million illegal immigrants in the U.S. Obama says it’s all part of his plan to give every man, woman, and child the chance to pay more taxes.
  • Republicans and Democrats are working on a new bill to streamline the healthcare system. It will reduce the cost of mammograms and prostate exams. But don’t worry. They’ll still be free at the airport.
  • A new survey found that 77 percent of Americans think politicians do serious harm to the country. Politicians are like, “Cool, at least they think we do something.”

It’s been quite a while since I’ve seen an Osama bin Laden joke, and it brought back memories of some classic humor that can be seen hereherehereherehere, and here.

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Remember when Obama claimed that there wasn’t a spending problem in Washington?

Cartoonists had a field day, portraying the President as an in-denial spendaholic.

But perhaps Obama was right. Not in the way he thinks, to be sure, but perhaps it’s better to categorize Washington’s spending binges as an eating disorder.

Or, to be more charitable, as a form of gluttony.

We’ve already explored that theme in this cartoon about redistribution, as well as this cartoon about the VAT.

And that’s the point of this new Lisa Benson cartoon.

Eating Disorder Cartoon 1

As you can probably guess, I wish the plus-sized lady was labeled “big government” or “government spending,” but it’s still a good cartoon.

Henry Payne has a similar message in his cartoon, and I like it even better because it’s obvious that the problem is that government is too big.

Eating Disorder Cartoon 2

If you like the gluttony genre but prefer monsters instead of people, this cartoon about spending and the fiscal cliff is worth sharing, as is this cartoon about class-warfare taxes and the deficit.

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Every so often, you get a “teaching moment” in Washington, and we now have an excellent opportunity to educate lawmakers about the “offshore” world because President Obama’s nominee to be Treasury Secretary has been caught with his hand in the tax haven cookie jar.

Mr. Lew not only invested some of his own money in a Cayman-based fund, he also was in charge of a Citi Bank division that had over 100 Cayman-domiciled funds.

As you can imagine, Republicans are having some fun with this issue.

Democrats used to be critical of Ugland House

Mitt Romney was subjected to a lot of class-warfare demagoguery during the 2012 campaign because he also invested  some of his wealth in a Cayman fund, so GOPers are hoisting Lew on a petard and grilling him about the obvious hypocrisy of a leftist utilizing – both personally and professionally – a jurisdiction that commits the unforgivable crime of not imposing income tax.

In a sensible world, Lew would say what everyone in the financial world already understands, which is that the Cayman Islands are an excellent, fully legal, tax-neutral platform for investment funds because 1) there’s no added layer of tax, 2) there’s good rule of law, and, 3) foreigners can invest in the American economy without creating any nexus with the IRS.

But we don’t live in a sensible world, so Lew instead wants us to believe he’s a moron and that he didn’t realize that funds were domiciled in Cayman.

And I guess all the other wealthy leftists with offshore-based investments probably think that as well, right?

Anyhow, I’m taking a glass-half-full perspective on this kerfuffle since it gives me an opportunity to educate more people about why tax havens are a liberalizing and positive force in the global economy.

Oh, what about Lew as Treasury Secretary? Well, as I explain for Real News, he’s competent but misguided.

In other words, the chances of any good reform in the next four years are asymptotically approaching zero. Based on his background (and also based on the views of the President he’ll be serving), it’s virtually impossible to envision good entitlement reform, pro-growth tax reform, and any changes to lessen the likelihood of future Greek-style fiscal collapse (as amusingly illustrated by this cartoon).

So with any luck, they’ll be some tax havens around that the rest of us can utilize when that day of reckoning occurs.

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This Henry Payne cartoon is satire, but it’s eerie how the “Valentine’s Fairness Act” seems quite similar to the litany of spending, regulation, and intervention we endured as part of the State of the Union address.

Obama Valentine Cartoon

With a rising burden of government spending and more class-warfare tax policy, the only folks getting a real Valentine are the special interest groups. And we’re paying for it, whether we like it or not.

You can enjoy some of Payne’s best cartoons here, here, here, here, here, herehereherehere, and here. My favorite is the one with Robin Hood.

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Late last year, I shared a very powerful article by an admitted liberal who concluded that gun control was impractical and illogical.

Now I want to share a New York Times column from another leftist. Justin Cronin also supports the right of gun ownership, but he offers a more personal reason for his support of the Second Amendment.

Here are some of the key excerpts from his column.

I am a New England liberal, born and bred. I have lived most of my life in the Northeast — Boston, New York and Philadelphia — and my politics are devoutly Democratic. I am also a Texas resident and a gun owner. I have half a dozen pistols in my safe, all semiautomatics, the largest capable of holding 20 rounds. …I’m currently shopping for a shotgun, either a Remington 870 Express Tactical or a Mossberg 500 Flex with a pistol grip and adjustable stock. …I am my family’s last line of defense. I have chosen to meet this responsibility, in part, by being armed. It wasn’t a choice I made lightly.

A “pistol grip”? A gun that holds “20 rounds”? An “adjustable stock”? Gasp, the horror! I imagine Obama is probably sending the BATF after this guy. Heck, maybe even target him with a drone.

So why does this self-described leftist own guns and believe in the right to self-defense? The answer is common sense, based in part on what happened when Hurricane Rita was heading toward Houston.

My wife and I arranged to stay at a friend’s house in Austin, packed up the kids and dog, and headed out of town — or tried to. As many as 3.7 million people had the same idea, making Rita one of the largest evacuations in history, with predictable results. By 2 in the morning, after six hours on the road, we had made it all of 50 miles. The scene was like a snapshot from the Apocalypse: crowds milling restlessly, gas stations and mini-marts picked clean and heaped with trash, families sleeping by the side of the road. The situation had the hopped-up feel of barely bottled chaos. After Katrina, nobody had any illusions that help was on its way. It also occurred to me that there were probably a lot of guns out there… Here I was with two tiny children, a couple of thousand dollars in cash, a late-model S.U.V. with half a tank of gas and not so much as a heavy book to throw. …Rita made a last-minute turn away from Houston. But what if it hadn’t? I believe people are basically good, but not all of them and not all the time. Like most citizens of our modern, technological world, I am wholly reliant upon a fragile web of services to meet my most basic needs. What would happen if those services collapsed? Chaos, that’s what.

We’ve already witnessed real-world examples of societal breakdown caused by government incompetence and failure.

Armed Koreans Disarmed TurksI wrote two years ago to celebrate the superiority of the American system, which allowed Korean shopowners to protect themselves during the Rodney King riots in Los Angeles, and the British system, which left immigrant shopowners vulnerable and defenseless to rampaging mobs.

That argument gets more relevant and powerful every year. Indeed, there have been riots all over Europe, and I suspect that we’ll see more chaos and social disarray as the welfare state continues to collapse. And as I discuss in this NRA-TV interview, only a fool (or a victim of bad government) is unarmed when the you-know-what hits the fan.

Simply stated, would you want to leave your family vulnerable, and rely on the callow and feckless political class for their safety? I hope not, which is why I’m surprised that “protection during a societal breakdown” only got about 13 percent of the vote in my poll asking the most important reason to oppose gun control.

Let’s return to the NYT column. Our liberal columnist naively wishes guns didn’t exist (as if a pack of young, male thugs need weapons to terrorize a family), but at least he recognizes that his anti-gun leftist friends don’t know what they’re talking about.

…in the weeks since Newtown, I’ve watched my Facebook feed, which is dominated by my coastal friends, fill up with anti-gun dispatches that seemed divorced from reality. I agree it would be nice if the world had exactly zero guns in it. But I don’t see that happening, and calling gun owners “a bunch of inbred rednecks” doesn’t do much to advance rational discussion. Thus, my secret life — though I guess it’s not such a secret anymore.

Here’s a final excerpt that is very heartwarming, and this picture reveals that I obviously share the same sentiments.

My wife is afraid of my guns (though she also says she’s glad I have them). My 16-year-old daughter is a different story. …she asked to take a pistol lesson. …the instructor ran her through the basics, demonstrating with a Glock 9-millimeter: how to hold it, load it, pull back the slide. “You’ll probably have trouble with that part,” he said. “A lot of the women do.” “Oh really?” my daughter replied, and with a cagey smile proceeded to rack her weapon with such authority you could have heard it in the parking lot. A proud-papa moment? I confess it was.

If you want more practical information on gun control, I strongly recommend the famous Larry Correia article. And for wisdom on the issue of so-called assault weapons, John Lott is the oracle.

And if you want to laugh at the dishonest (or naive) liberals, watch this amusing video to see how they think gun control works in their fantasy world.

Then give your leftist friends this IQ test on gun control and see if they can figure out the right answer.

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